Correlation Between Wells Fargo and Pinterest
Can any of the company-specific risk be diversified away by investing in both Wells Fargo and Pinterest 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 Pinterest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wells Fargo Co and Pinterest, you can compare the effects of market volatilities on Wells Fargo and Pinterest 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 Pinterest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wells Fargo and Pinterest.
Diversification Opportunities for Wells Fargo and Pinterest
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Wells and Pinterest is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Wells Fargo Co and Pinterest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pinterest 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 Co are associated (or correlated) with Pinterest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pinterest has no effect on the direction of Wells Fargo i.e., Wells Fargo and Pinterest go up and down completely randomly.
Pair Corralation between Wells Fargo and Pinterest
Assuming the 90 days horizon Wells Fargo Co is expected to generate 0.05 times more return on investment than Pinterest. However, Wells Fargo Co is 18.55 times less risky than Pinterest. It trades about 0.14 of its potential returns per unit of risk. Pinterest is currently generating about -0.06 per unit of risk. If you would invest 1,698 in Wells Fargo Co on September 3, 2024 and sell it today you would earn a total of 10.00 from holding Wells Fargo Co or generate 0.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wells Fargo Co vs. Pinterest
Performance |
| Timeline |
| Wells Fargo |
Wells Fargo and Pinterest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wells Fargo and Pinterest
The main advantage of trading using opposite Wells Fargo and Pinterest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wells Fargo position performs unexpectedly, Pinterest 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 Pinterest will offset losses from the drop in Pinterest's long position.| Wells Fargo vs. Mayfair Gold Corp | Wells Fargo vs. Porvair plc | Wells Fargo vs. Artisan Partners Asset | Wells Fargo vs. Alaska Air Group |
| Pinterest vs. Twilio Inc | Pinterest vs. Meta Platforms | Pinterest vs. Alphabet Inc Class C | Pinterest vs. Alphabet Inc Class A |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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