Correlation Between Wells Fargo and Aig Government
Can any of the company-specific risk be diversified away by investing in both Wells Fargo and Aig Government 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 Aig Government into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wells Fargo Strategic and Aig Government Money, you can compare the effects of market volatilities on Wells Fargo and Aig Government 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 Aig Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wells Fargo and Aig Government.
Diversification Opportunities for Wells Fargo and Aig Government
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Wells and Aig is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Wells Fargo Strategic and Aig Government Money in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aig Government Money 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 Strategic are associated (or correlated) with Aig Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aig Government Money has no effect on the direction of Wells Fargo i.e., Wells Fargo and Aig Government go up and down completely randomly.
Pair Corralation between Wells Fargo and Aig Government
Assuming the 90 days horizon Wells Fargo is expected to generate 2.03 times less return on investment than Aig Government. In addition to that, Wells Fargo is 1.45 times more volatile than Aig Government Money. It trades about 0.17 of its total potential returns per unit of risk. Aig Government Money is currently generating about 0.49 per unit of volatility. If you would invest 1,007 in Aig Government Money on September 12, 2024 and sell it today you would earn a total of 11.00 from holding Aig Government Money or generate 1.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Wells Fargo Strategic vs. Aig Government Money
Performance |
| Timeline |
| Wells Fargo Strategic |
| Aig Government Money |
Wells Fargo and Aig Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wells Fargo and Aig Government
The main advantage of trading using opposite Wells Fargo and Aig Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wells Fargo position performs unexpectedly, Aig Government 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 Aig Government will offset losses from the drop in Aig Government's long position.| Wells Fargo vs. Aig Government Money | Wells Fargo vs. Hsbc Treasury Money | Wells Fargo vs. Prudential Government Money | Wells Fargo vs. Cref Money Market |
| Aig Government vs. SCOR PK | Aig Government vs. Morningstar Unconstrained Allocation | Aig Government vs. Via Renewables | Aig Government vs. Bondbloxx ETF Trust |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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