Correlation Between Gamco Global and Wells Fargo
Can any of the company-specific risk be diversified away by investing in both Gamco Global 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 Gamco Global and Wells Fargo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gamco Global Gold and Wells Fargo Advantage, you can compare the effects of market volatilities on Gamco Global 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 Gamco Global with a short position of Wells Fargo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gamco Global and Wells Fargo.
Diversification Opportunities for Gamco Global and Wells Fargo
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Gamco and Wells is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Gamco Global Gold and Wells Fargo Advantage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wells Fargo Advantage and Gamco Global 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 Gamco Global Gold 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 Advantage has no effect on the direction of Gamco Global i.e., Gamco Global and Wells Fargo go up and down completely randomly.
Pair Corralation between Gamco Global and Wells Fargo
Assuming the 90 days horizon Gamco Global is expected to generate 4.15 times less return on investment than Wells Fargo. But when comparing it to its historical volatility, Gamco Global Gold is 2.01 times less risky than Wells Fargo. It trades about 0.02 of its potential returns per unit of risk. Wells Fargo Advantage is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 4,287 in Wells Fargo Advantage on August 30, 2024 and sell it today you would earn a total of 1,841 from holding Wells Fargo Advantage or generate 42.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gamco Global Gold vs. Wells Fargo Advantage
Performance |
| Timeline |
| Gamco Global Gold |
| Wells Fargo Advantage |
Gamco Global and Wells Fargo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gamco Global and Wells Fargo
The main advantage of trading using opposite Gamco Global and Wells Fargo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gamco Global 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.| Gamco Global vs. Vanguard Total Stock | Gamco Global vs. Vanguard 500 Index | Gamco Global vs. Vanguard Total Stock | Gamco Global vs. Vanguard Total Stock |
| Wells Fargo vs. Wells Fargo Advantage | Wells Fargo vs. Wells Fargo Advantage | Wells Fargo vs. Ocm Mutual Fund | Wells Fargo vs. Precious Metals Fund |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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