Correlation Between Washington Mutual and Wells Fargo
Can any of the company-specific risk be diversified away by investing in both Washington Mutual and Wells Fargo 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 Washington Mutual and Wells Fargo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Washington Mutual Investors and Wells Fargo Special, you can compare the effects of market volatilities on Washington Mutual and Wells Fargo 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 Washington Mutual with a short position of Wells Fargo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Washington Mutual and Wells Fargo.
Diversification Opportunities for Washington Mutual and Wells Fargo
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Washington and Wells is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Washington Mutual Investors and Wells Fargo Special in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wells Fargo Special and Washington Mutual 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 Washington Mutual Investors are associated (or correlated) with Wells Fargo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wells Fargo Special has no effect on the direction of Washington Mutual i.e., Washington Mutual and Wells Fargo go up and down completely randomly.
Pair Corralation between Washington Mutual and Wells Fargo
Assuming the 90 days horizon Washington Mutual Investors is expected to generate 0.91 times more return on investment than Wells Fargo. However, Washington Mutual Investors is 1.09 times less risky than Wells Fargo. It trades about 0.14 of its potential returns per unit of risk. Wells Fargo Special is currently generating about 0.11 per unit of risk. If you would invest 5,750 in Washington Mutual Investors on September 3, 2024 and sell it today you would earn a total of 853.00 from holding Washington Mutual Investors or generate 14.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Washington Mutual Investors vs. Wells Fargo Special
Performance |
| Timeline |
| Washington Mutual |
| Wells Fargo Special |
Washington Mutual and Wells Fargo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Washington Mutual and Wells Fargo
The main advantage of trading using opposite Washington Mutual and Wells Fargo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Washington Mutual position performs unexpectedly, Wells Fargo 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 Wells Fargo will offset losses from the drop in Wells Fargo's long position.| Washington Mutual vs. Ab Small Cap | Washington Mutual vs. Touchstone Small Cap | Washington Mutual vs. Us Small Cap | Washington Mutual vs. Qs Small Capitalization |
| Wells Fargo vs. Nuveen Small Cap | Wells Fargo vs. Ultramid Cap Profund Ultramid Cap | Wells Fargo vs. Blackrock Mid Cap | Wells Fargo vs. Victory Sycamore Established |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
Other Complementary Tools
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |