Correlation Between Wells Fargo and Clearbridge Small
Can any of the company-specific risk be diversified away by investing in both Wells Fargo and Clearbridge Small 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 Clearbridge Small 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 Clearbridge Small Cap, you can compare the effects of market volatilities on Wells Fargo and Clearbridge Small 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 Clearbridge Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wells Fargo and Clearbridge Small.
Diversification Opportunities for Wells Fargo and Clearbridge Small
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between WELLS and Clearbridge is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Wells Fargo Special and Clearbridge Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearbridge Small Cap 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 Clearbridge Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearbridge Small Cap has no effect on the direction of Wells Fargo i.e., Wells Fargo and Clearbridge Small go up and down completely randomly.
Pair Corralation between Wells Fargo and Clearbridge Small
Assuming the 90 days horizon Wells Fargo is expected to generate 2.72 times less return on investment than Clearbridge Small. But when comparing it to its historical volatility, Wells Fargo Special is 1.73 times less risky than Clearbridge Small. It trades about 0.13 of its potential returns per unit of risk. Clearbridge Small Cap is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 2,343 in Clearbridge Small Cap on September 2, 2024 and sell it today you would earn a total of 374.00 from holding Clearbridge Small Cap or generate 15.96% 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. Clearbridge Small Cap
Performance |
| Timeline |
| Wells Fargo Special |
| Clearbridge Small Cap |
Wells Fargo and Clearbridge Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wells Fargo and Clearbridge Small
The main advantage of trading using opposite Wells Fargo and Clearbridge Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wells Fargo position performs unexpectedly, Clearbridge Small 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 Clearbridge Small will offset losses from the drop in Clearbridge Small'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 |
| Clearbridge Small vs. Clearbridge Aggressive Growth | Clearbridge Small vs. Clearbridge Small Cap | Clearbridge Small vs. Qs International Equity | Clearbridge Small vs. Clearbridge Appreciation Fund |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Fundamental Analysis View fundamental data based on most recent published financial statements |