Correlation Between Wells Fargo and Barclays PLC
Can any of the company-specific risk be diversified away by investing in both Wells Fargo and Barclays PLC 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 Barclays PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wells Fargo and Barclays PLC ADR, you can compare the effects of market volatilities on Wells Fargo and Barclays PLC 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 Barclays PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wells Fargo and Barclays PLC.
Diversification Opportunities for Wells Fargo and Barclays PLC
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Wells and Barclays is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Wells Fargo and Barclays PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barclays PLC ADR 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 Barclays PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barclays PLC ADR has no effect on the direction of Wells Fargo i.e., Wells Fargo and Barclays PLC go up and down completely randomly.
Pair Corralation between Wells Fargo and Barclays PLC
Considering the 90-day investment horizon Wells Fargo is expected to generate 1.68 times more return on investment than Barclays PLC. However, Wells Fargo is 1.68 times more volatile than Barclays PLC ADR. It trades about 0.24 of its potential returns per unit of risk. Barclays PLC ADR is currently generating about 0.07 per unit of risk. If you would invest 6,523 in Wells Fargo on August 27, 2024 and sell it today you would earn a total of 1,073 from holding Wells Fargo or generate 16.45% 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. Barclays PLC ADR
Performance |
| Timeline |
| Wells Fargo |
| Barclays PLC ADR |
Wells Fargo and Barclays PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wells Fargo and Barclays PLC
The main advantage of trading using opposite Wells Fargo and Barclays PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wells Fargo position performs unexpectedly, Barclays PLC 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 Barclays PLC will offset losses from the drop in Barclays PLC's long position.| Wells Fargo vs. Nu Holdings | Wells Fargo vs. HSBC Holdings PLC | Wells Fargo vs. Bank of Montreal | Wells Fargo vs. Bank of Nova |
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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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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