Correlation Between Wells Fargo and Inflation-protected
Can any of the company-specific risk be diversified away by investing in both Wells Fargo and Inflation-protected 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 Inflation-protected into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wells Fargo Advantage and Inflation Protected Bond Fund, you can compare the effects of market volatilities on Wells Fargo and Inflation-protected 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 Inflation-protected. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wells Fargo and Inflation-protected.
Diversification Opportunities for Wells Fargo and Inflation-protected
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wells and Inflation-protected is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Wells Fargo Advantage and Inflation Protected Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inflation Protected 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 Advantage are associated (or correlated) with Inflation-protected. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inflation Protected has no effect on the direction of Wells Fargo i.e., Wells Fargo and Inflation-protected go up and down completely randomly.
Pair Corralation between Wells Fargo and Inflation-protected
Assuming the 90 days horizon Wells Fargo Advantage is expected to generate 2.84 times more return on investment than Inflation-protected. However, Wells Fargo is 2.84 times more volatile than Inflation Protected Bond Fund. It trades about 0.07 of its potential returns per unit of risk. Inflation Protected Bond Fund is currently generating about 0.14 per unit of risk. If you would invest 1,299 in Wells Fargo Advantage on September 3, 2024 and sell it today you would earn a total of 183.00 from holding Wells Fargo Advantage or generate 14.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wells Fargo Advantage vs. Inflation Protected Bond Fund
Performance |
| Timeline |
| Wells Fargo Advantage |
| Inflation Protected |
Wells Fargo and Inflation-protected Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wells Fargo and Inflation-protected
The main advantage of trading using opposite Wells Fargo and Inflation-protected positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wells Fargo position performs unexpectedly, Inflation-protected 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 Inflation-protected will offset losses from the drop in Inflation-protected's long position.| Wells Fargo vs. Scharf Global Opportunity | Wells Fargo vs. Qs Global Equity | Wells Fargo vs. Volumetric Fund Volumetric | Wells Fargo vs. Artisan Thematic Fund |
| Inflation-protected vs. American Funds Inflation | Inflation-protected vs. American Funds Inflation | Inflation-protected vs. American Funds Inflation | Inflation-protected vs. American Funds Inflation |
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 Stocks Directory module to find actively traded stocks across global markets.
Other Complementary Tools
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |