Correlation Between Wells Fargo and Catalyst/millburn
Can any of the company-specific risk be diversified away by investing in both Wells Fargo and Catalyst/millburn 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 Catalyst/millburn into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wells Fargo Funds and Catalystmillburn Hedge Strategy, you can compare the effects of market volatilities on Wells Fargo and Catalyst/millburn 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 Catalyst/millburn. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wells Fargo and Catalyst/millburn.
Diversification Opportunities for Wells Fargo and Catalyst/millburn
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wells and Catalyst/millburn is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Wells Fargo Funds and Catalystmillburn Hedge Strateg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalystmillburn Hedge 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 Funds are associated (or correlated) with Catalyst/millburn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalystmillburn Hedge has no effect on the direction of Wells Fargo i.e., Wells Fargo and Catalyst/millburn go up and down completely randomly.
Pair Corralation between Wells Fargo and Catalyst/millburn
Assuming the 90 days horizon Wells Fargo is expected to generate 3.61 times less return on investment than Catalyst/millburn. But when comparing it to its historical volatility, Wells Fargo Funds is 3.53 times less risky than Catalyst/millburn. It trades about 0.06 of its potential returns per unit of risk. Catalystmillburn Hedge Strategy is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 3,464 in Catalystmillburn Hedge Strategy on September 3, 2024 and sell it today you would earn a total of 380.00 from holding Catalystmillburn Hedge Strategy or generate 10.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.02% |
| Values | Daily Returns |
Wells Fargo Funds vs. Catalystmillburn Hedge Strateg
Performance |
| Timeline |
| Wells Fargo Funds |
| Catalystmillburn Hedge |
Wells Fargo and Catalyst/millburn Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wells Fargo and Catalyst/millburn
The main advantage of trading using opposite Wells Fargo and Catalyst/millburn positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wells Fargo position performs unexpectedly, Catalyst/millburn 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 Catalyst/millburn will offset losses from the drop in Catalyst/millburn's long position.| Wells Fargo vs. Vanguard Total Stock | Wells Fargo vs. Vanguard 500 Index | Wells Fargo vs. Vanguard Total Stock | Wells Fargo vs. Vanguard Total Stock |
| Catalyst/millburn vs. Blackrock Exchange Portfolio | Catalyst/millburn vs. Janus Investment | Catalyst/millburn vs. Wells Fargo Funds | Catalyst/millburn vs. John Hancock Money |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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