Correlation Between Wells Fargo and Loomis Sayles
Can any of the company-specific risk be diversified away by investing in both Wells Fargo and Loomis Sayles 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 Loomis Sayles 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 Loomis Sayles Small, you can compare the effects of market volatilities on Wells Fargo and Loomis Sayles 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 Loomis Sayles. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wells Fargo and Loomis Sayles.
Diversification Opportunities for Wells Fargo and Loomis Sayles
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Wells and Loomis is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Wells Fargo Special and Loomis Sayles Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loomis Sayles Small 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 Loomis Sayles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loomis Sayles Small has no effect on the direction of Wells Fargo i.e., Wells Fargo and Loomis Sayles go up and down completely randomly.
Pair Corralation between Wells Fargo and Loomis Sayles
Assuming the 90 days horizon Wells Fargo is expected to generate 1.92 times less return on investment than Loomis Sayles. But when comparing it to its historical volatility, Wells Fargo Special is 2.13 times less risky than Loomis Sayles. It trades about 0.36 of its potential returns per unit of risk. Loomis Sayles Small is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 2,969 in Loomis Sayles Small on September 3, 2024 and sell it today you would earn a total of 339.00 from holding Loomis Sayles Small or generate 11.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wells Fargo Special vs. Loomis Sayles Small
Performance |
| Timeline |
| Wells Fargo Special |
| Loomis Sayles Small |
Wells Fargo and Loomis Sayles Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wells Fargo and Loomis Sayles
The main advantage of trading using opposite Wells Fargo and Loomis Sayles positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wells Fargo position performs unexpectedly, Loomis Sayles 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 Loomis Sayles will offset losses from the drop in Loomis Sayles' long position.| Wells Fargo vs. Nuveen Small Cap | Wells Fargo vs. Ultramid Cap Profund Ultramid Cap | Wells Fargo vs. Blackrock Mid Cap |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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