Correlation Between Wells Fargo and Moelis
Can any of the company-specific risk be diversified away by investing in both Wells Fargo and Moelis 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 Moelis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wells Fargo and Moelis Co, you can compare the effects of market volatilities on Wells Fargo and Moelis 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 Moelis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wells Fargo and Moelis.
Diversification Opportunities for Wells Fargo and Moelis
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wells and Moelis is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Wells Fargo and Moelis Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moelis 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 Moelis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moelis has no effect on the direction of Wells Fargo i.e., Wells Fargo and Moelis go up and down completely randomly.
Pair Corralation between Wells Fargo and Moelis
Considering the 90-day investment horizon Wells Fargo is expected to generate 0.72 times more return on investment than Moelis. However, Wells Fargo is 1.39 times less risky than Moelis. It trades about 0.26 of its potential returns per unit of risk. Moelis Co is currently generating about 0.19 per unit of risk. If you would invest 6,523 in Wells Fargo on August 28, 2024 and sell it today you would earn a total of 1,167 from holding Wells Fargo or generate 17.89% 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. Moelis Co
Performance |
| Timeline |
| Wells Fargo |
| Moelis |
Wells Fargo and Moelis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wells Fargo and Moelis
The main advantage of trading using opposite Wells Fargo and Moelis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wells Fargo position performs unexpectedly, Moelis 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 Moelis will offset losses from the drop in Moelis' 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 |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
Other Complementary Tools
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites |