Correlation Between Wells Fargo and Western Asset
Can any of the company-specific risk be diversified away by investing in both Wells Fargo and Western Asset 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 Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wells Fargo Alternative and Western Asset Diversified, you can compare the effects of market volatilities on Wells Fargo and Western Asset 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 Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wells Fargo and Western Asset.
Diversification Opportunities for Wells Fargo and Western Asset
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Wells and Western is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Wells Fargo Alternative and Western Asset Diversified in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Diversified 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 Alternative are associated (or correlated) with Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Diversified has no effect on the direction of Wells Fargo i.e., Wells Fargo and Western Asset go up and down completely randomly.
Pair Corralation between Wells Fargo and Western Asset
Assuming the 90 days horizon Wells Fargo Alternative is expected to generate 0.93 times more return on investment than Western Asset. However, Wells Fargo Alternative is 1.08 times less risky than Western Asset. It trades about 0.04 of its potential returns per unit of risk. Western Asset Diversified is currently generating about 0.02 per unit of risk. If you would invest 789.00 in Wells Fargo Alternative on September 2, 2024 and sell it today you would earn a total of 43.00 from holding Wells Fargo Alternative or generate 5.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wells Fargo Alternative vs. Western Asset Diversified
Performance |
| Timeline |
| Wells Fargo Alternative |
| Western Asset Diversified |
Wells Fargo and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wells Fargo and Western Asset
The main advantage of trading using opposite Wells Fargo and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wells Fargo position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset's long position.| Wells Fargo vs. Wells Fargo Strategic | Wells Fargo vs. Wells Fargo Emerging | Wells Fargo vs. Wells Fargo Short Term | Wells Fargo vs. Wells Fargo Small |
| Western Asset vs. Morningstar Unconstrained Allocation | Western Asset vs. Old Westbury Large | Western Asset vs. T Rowe Price | Western Asset vs. Enhanced Large Pany |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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