Correlation Between Wells Fargo and Dow 2x
Can any of the company-specific risk be diversified away by investing in both Wells Fargo and Dow 2x 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 Dow 2x into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wells Fargo Large and Dow 2x Strategy, you can compare the effects of market volatilities on Wells Fargo and Dow 2x 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 Dow 2x. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wells Fargo and Dow 2x.
Diversification Opportunities for Wells Fargo and Dow 2x
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Wells and Dow is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Wells Fargo Large and Dow 2x Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow 2x Strategy 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 Large are associated (or correlated) with Dow 2x. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow 2x Strategy has no effect on the direction of Wells Fargo i.e., Wells Fargo and Dow 2x go up and down completely randomly.
Pair Corralation between Wells Fargo and Dow 2x
Assuming the 90 days horizon Wells Fargo Large is expected to under-perform the Dow 2x. In addition to that, Wells Fargo is 2.44 times more volatile than Dow 2x Strategy. It trades about -0.17 of its total potential returns per unit of risk. Dow 2x Strategy is currently generating about 0.04 per unit of volatility. If you would invest 15,515 in Dow 2x Strategy on September 14, 2024 and sell it today you would earn a total of 110.00 from holding Dow 2x Strategy or generate 0.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wells Fargo Large vs. Dow 2x Strategy
Performance |
| Timeline |
| Wells Fargo Large |
| Dow 2x Strategy |
Wells Fargo and Dow 2x Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wells Fargo and Dow 2x
The main advantage of trading using opposite Wells Fargo and Dow 2x positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wells Fargo position performs unexpectedly, Dow 2x 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 Dow 2x will offset losses from the drop in Dow 2x's long position.| Wells Fargo vs. Wells Fargo Large | Wells Fargo vs. Wells Fargo Large | Wells Fargo vs. Janus Growth And | Wells Fargo vs. Praxis Growth Index |
| Dow 2x vs. Sp 500 2x | Dow 2x vs. Inverse Dow 2x | Dow 2x vs. Nasdaq 100 2x Strategy | Dow 2x vs. Russell 2000 2x |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
Other Complementary Tools
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data |