Correlation Between Wells Fargo and Shinhan Financial
Can any of the company-specific risk be diversified away by investing in both Wells Fargo and Shinhan 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 Shinhan 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 Shinhan Financial Group, you can compare the effects of market volatilities on Wells Fargo and Shinhan 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 Shinhan Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wells Fargo and Shinhan Financial.
Diversification Opportunities for Wells Fargo and Shinhan Financial
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Wells and Shinhan is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Wells Fargo and Shinhan Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinhan Financial 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 Shinhan Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinhan Financial has no effect on the direction of Wells Fargo i.e., Wells Fargo and Shinhan Financial go up and down completely randomly.
Pair Corralation between Wells Fargo and Shinhan Financial
Considering the 90-day investment horizon Wells Fargo is expected to generate 0.88 times more return on investment than Shinhan Financial. However, Wells Fargo is 1.14 times less risky than Shinhan Financial. It trades about 0.0 of its potential returns per unit of risk. Shinhan Financial Group is currently generating about -0.16 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. Shinhan Financial Group
Performance |
| Timeline |
| Wells Fargo |
| Shinhan Financial |
Wells Fargo and Shinhan Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wells Fargo and Shinhan Financial
The main advantage of trading using opposite Wells Fargo and Shinhan Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wells Fargo position performs unexpectedly, Shinhan 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 Shinhan Financial will offset losses from the drop in Shinhan 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 |
| Shinhan Financial vs. Community West Bancshares | Shinhan Financial vs. First Financial Northwest | Shinhan Financial vs. Ponce Financial Group | Shinhan Financial vs. Finwise 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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