Correlation Between Western Asset and Wells Fargo
Can any of the company-specific risk be diversified away by investing in both Western Asset 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 Western Asset and Wells Fargo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Diversified and Wells Fargo Mon, you can compare the effects of market volatilities on Western Asset 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 Western Asset with a short position of Wells Fargo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Wells Fargo.
Diversification Opportunities for Western Asset and Wells Fargo
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Western and Wells is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Diversified and Wells Fargo Mon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wells Fargo Mon and Western Asset 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 Western Asset Diversified 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 Mon has no effect on the direction of Western Asset i.e., Western Asset and Wells Fargo go up and down completely randomly.
Pair Corralation between Western Asset and Wells Fargo
Assuming the 90 days horizon Western Asset Diversified is expected to generate 0.24 times more return on investment than Wells Fargo. However, Western Asset Diversified is 4.2 times less risky than Wells Fargo. It trades about 0.01 of its potential returns per unit of risk. Wells Fargo Mon is currently generating about 0.0 per unit of risk. If you would invest 1,549 in Western Asset Diversified on September 14, 2024 and sell it today you would earn a total of 5.00 from holding Western Asset Diversified or generate 0.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Diversified vs. Wells Fargo Mon
Performance |
| Timeline |
| Western Asset Diversified |
| Wells Fargo Mon |
Western Asset and Wells Fargo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Wells Fargo
The main advantage of trading using opposite Western Asset and Wells Fargo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset 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.| Western Asset vs. Vanguard Total Stock | Western Asset vs. Vanguard 500 Index | Western Asset vs. Vanguard Total Stock | Western Asset vs. Vanguard Total Stock |
| Wells Fargo vs. Dunham Large Cap | Wells Fargo vs. Large Cap Growth Profund | Wells Fargo vs. Qs Large Cap | Wells Fargo vs. M Large Cap |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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