Correlation Between Wells Fargo and Equitable Holdings
Can any of the company-specific risk be diversified away by investing in both Wells Fargo and Equitable Holdings at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Wells Fargo and Equitable Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wells Fargo and Equitable Holdings, you can compare the effects of market volatilities on Wells Fargo and Equitable Holdings and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Wells Fargo with a short position of Equitable Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wells Fargo and Equitable Holdings.
Diversification Opportunities for Wells Fargo and Equitable Holdings
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Wells and Equitable is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Wells Fargo and Equitable Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equitable Holdings and Wells Fargo is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Wells Fargo are associated (or correlated) with Equitable Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equitable Holdings has no effect on the direction of Wells Fargo i.e., Wells Fargo and Equitable Holdings go up and down completely randomly.
Pair Corralation between Wells Fargo and Equitable Holdings
Assuming the 90 days trading horizon Wells Fargo is expected to generate 1.2 times less return on investment than Equitable Holdings. But when comparing it to its historical volatility, Wells Fargo is 1.28 times less risky than Equitable Holdings. It trades about 0.04 of its potential returns per unit of risk. Equitable Holdings is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,835 in Equitable Holdings on August 24, 2024 and sell it today you would earn a total of 394.00 from holding Equitable Holdings or generate 21.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wells Fargo vs. Equitable Holdings
Performance |
| Timeline |
| Wells Fargo |
| Equitable Holdings |
Wells Fargo and Equitable Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wells Fargo and Equitable Holdings
The main advantage of trading using opposite Wells Fargo and Equitable Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wells Fargo position performs unexpectedly, Equitable Holdings can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Equitable Holdings will offset losses from the drop in Equitable Holdings' long position.| Wells Fargo vs. Capital One Financial | Wells Fargo vs. Bank of America | Wells Fargo vs. Wells Fargo | Wells Fargo vs. Capital One Financial |
| Equitable Holdings vs. Arch Capital Group | Equitable Holdings vs. The Allstate | Equitable Holdings vs. Brighthouse Financial | Equitable Holdings vs. Athene Holding |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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