Correlation Between Wells Fargo and Counterpoint Tactical
Can any of the company-specific risk be diversified away by investing in both Wells Fargo and Counterpoint Tactical 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 Counterpoint Tactical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wells Fargo Municipal and Counterpoint Tactical Municipal, you can compare the effects of market volatilities on Wells Fargo and Counterpoint Tactical 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 Counterpoint Tactical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wells Fargo and Counterpoint Tactical.
Diversification Opportunities for Wells Fargo and Counterpoint Tactical
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wells and Counterpoint is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Wells Fargo Municipal and Counterpoint Tactical Municipa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Counterpoint Tactical 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 Municipal are associated (or correlated) with Counterpoint Tactical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Counterpoint Tactical has no effect on the direction of Wells Fargo i.e., Wells Fargo and Counterpoint Tactical go up and down completely randomly.
Pair Corralation between Wells Fargo and Counterpoint Tactical
Assuming the 90 days horizon Wells Fargo Municipal is expected to under-perform the Counterpoint Tactical. In addition to that, Wells Fargo is 3.39 times more volatile than Counterpoint Tactical Municipal. It trades about -0.09 of its total potential returns per unit of risk. Counterpoint Tactical Municipal is currently generating about -0.2 per unit of volatility. If you would invest 1,058 in Counterpoint Tactical Municipal on January 18, 2025 and sell it today you would lose (11.00) from holding Counterpoint Tactical Municipal or give up 1.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Wells Fargo Municipal vs. Counterpoint Tactical Municipa
Performance |
| Timeline |
| Wells Fargo Municipal |
| Counterpoint Tactical |
Wells Fargo and Counterpoint Tactical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wells Fargo and Counterpoint Tactical
The main advantage of trading using opposite Wells Fargo and Counterpoint Tactical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wells Fargo position performs unexpectedly, Counterpoint Tactical 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 Counterpoint Tactical will offset losses from the drop in Counterpoint Tactical's long position.| Wells Fargo vs. Touchstone Small Cap | Wells Fargo vs. T Rowe Price | Wells Fargo vs. Transamerica International Small | Wells Fargo vs. Kinetics Small 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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