Correlation Between Wells Fargo and BCB Bancorp
Can any of the company-specific risk be diversified away by investing in both Wells Fargo and BCB Bancorp 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 BCB Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wells Fargo and BCB Bancorp, you can compare the effects of market volatilities on Wells Fargo and BCB Bancorp 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 BCB Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wells Fargo and BCB Bancorp.
Diversification Opportunities for Wells Fargo and BCB Bancorp
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wells and BCB is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Wells Fargo and BCB Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCB Bancorp 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 BCB Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BCB Bancorp has no effect on the direction of Wells Fargo i.e., Wells Fargo and BCB Bancorp go up and down completely randomly.
Pair Corralation between Wells Fargo and BCB Bancorp
Considering the 90-day investment horizon Wells Fargo is expected to generate 1.09 times more return on investment than BCB Bancorp. However, Wells Fargo is 1.09 times more volatile than BCB Bancorp. It trades about 0.22 of its potential returns per unit of risk. BCB Bancorp is currently generating about 0.03 per unit of risk. If you would invest 5,248 in Wells Fargo on September 13, 2024 and sell it today you would earn a total of 1,912 from holding Wells Fargo or generate 36.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wells Fargo vs. BCB Bancorp
Performance |
| Timeline |
| Wells Fargo |
| BCB Bancorp |
Wells Fargo and BCB Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wells Fargo and BCB Bancorp
The main advantage of trading using opposite Wells Fargo and BCB Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wells Fargo position performs unexpectedly, BCB Bancorp 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 BCB Bancorp will offset losses from the drop in BCB Bancorp's long position.| Wells Fargo vs. Citigroup | Wells Fargo vs. Toronto Dominion Bank | Wells Fargo vs. Nu Holdings | Wells Fargo vs. HSBC Holdings PLC |
| BCB Bancorp vs. Provident Financial Services | BCB Bancorp vs. First Mid Illinois | BCB Bancorp vs. ConnectOne Bancorp | BCB Bancorp vs. Finward Bancorp |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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