Correlation Between Wells Fargo and KB Financial
Can any of the company-specific risk be diversified away by investing in both Wells Fargo and KB Financial 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 KB Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wells Fargo and KB Financial Group, you can compare the effects of market volatilities on Wells Fargo and KB Financial 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 KB Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wells Fargo and KB Financial.
Diversification Opportunities for Wells Fargo and KB Financial
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Wells and KB Financial is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Wells Fargo and KB Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KB Financial Group 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 KB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KB Financial Group has no effect on the direction of Wells Fargo i.e., Wells Fargo and KB Financial go up and down completely randomly.
Pair Corralation between Wells Fargo and KB Financial
Considering the 90-day investment horizon Wells Fargo is expected to generate 0.74 times more return on investment than KB Financial. However, Wells Fargo is 1.35 times less risky than KB Financial. It trades about 0.0 of its potential returns per unit of risk. KB Financial Group is currently generating about -0.19 per unit of risk. If you would invest 7,756 in Wells Fargo on November 28, 2024 and sell it today you would lose (9.00) from holding Wells Fargo or give up 0.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wells Fargo vs. KB Financial Group
Performance |
| Timeline |
| Wells Fargo |
| KB Financial Group |
Wells Fargo and KB Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wells Fargo and KB Financial
The main advantage of trading using opposite Wells Fargo and KB Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wells Fargo position performs unexpectedly, KB Financial 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 KB Financial will offset losses from the drop in KB Financial's long position.| Wells Fargo vs. Bank of America | Wells Fargo vs. JPMorgan Chase Co | Wells Fargo vs. Toronto Dominion Bank | Wells Fargo vs. Nu Holdings |
| KB Financial vs. Shinhan Financial Group | KB Financial vs. Woori Financial Group | KB Financial vs. Korea Electric Power | KB Financial vs. Orix Corp Ads |
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 CEOs Directory module to screen CEOs from public companies around the world.
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