Correlation Between Wells Fargo and Baron Emerging
Can any of the company-specific risk be diversified away by investing in both Wells Fargo and Baron Emerging 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 Baron Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wells Fargo Special and Baron Emerging Markets, you can compare the effects of market volatilities on Wells Fargo and Baron Emerging 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 Baron Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wells Fargo and Baron Emerging.
Diversification Opportunities for Wells Fargo and Baron Emerging
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between WELLS and Baron is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Wells Fargo Special and Baron Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Emerging Markets 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 Special are associated (or correlated) with Baron Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Emerging Markets has no effect on the direction of Wells Fargo i.e., Wells Fargo and Baron Emerging go up and down completely randomly.
Pair Corralation between Wells Fargo and Baron Emerging
Assuming the 90 days horizon Wells Fargo Special is expected to generate 0.95 times more return on investment than Baron Emerging. However, Wells Fargo Special is 1.06 times less risky than Baron Emerging. It trades about 0.06 of its potential returns per unit of risk. Baron Emerging Markets is currently generating about 0.04 per unit of risk. If you would invest 4,420 in Wells Fargo Special on September 2, 2024 and sell it today you would earn a total of 1,094 from holding Wells Fargo Special or generate 24.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wells Fargo Special vs. Baron Emerging Markets
Performance |
| Timeline |
| Wells Fargo Special |
| Baron Emerging Markets |
Wells Fargo and Baron Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wells Fargo and Baron Emerging
The main advantage of trading using opposite Wells Fargo and Baron Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wells Fargo position performs unexpectedly, Baron Emerging 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 Baron Emerging will offset losses from the drop in Baron Emerging's long position.| Wells Fargo vs. Wells Fargo Emerging | Wells Fargo vs. The Hartford Midcap | Wells Fargo vs. Mfs Value Fund | Wells Fargo vs. Mfs Mid Cap |
| Baron Emerging vs. Eaton Vance Income | Baron Emerging vs. Baird Aggregate Bond | Baron Emerging vs. Champlain Small | Baron Emerging vs. Mfs Emerging Markets |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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