Two Equities Correlation Analysis
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WFC
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This model provides you with a quick lookup of cross correlation between two equities. Please specify two instruments to run the correlation.
Diversification Opportunities for Wells Fargo and NYSE Composite
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wells and NYSE is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Wells Fargo and NYSE Composite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NYSE Composite 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 are associated (or correlated) with NYSE Composite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NYSE Composite has no effect on the direction of Wells Fargo i.e., Wells Fargo and NYSE Composite go up and down completely randomly.
Pair Corralation between Wells Fargo and NYSE Composite
Considering the 90-day investment horizon Wells Fargo is expected to generate 2.13 times more return on investment than NYSE Composite. However, Wells Fargo is 2.13 times more volatile than NYSE Composite. It trades about 0.32 of its potential returns per unit of risk. NYSE Composite is currently generating about 0.17 per unit of risk. If you would invest 4,824 in Wells Fargo on February 13, 2024 and sell it today you would earn a total of 1,365 from holding Wells Fargo or generate 28.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wells Fargo vs. NYSE Composite
Performance |
| Timeline |
Wells Fargo and NYSE Composite Volatility Contrast
Predicted Return Density |
| Returns |
Wells Fargo
Pair trading matchups for Wells Fargo
NYSE Composite
Pair trading matchups for NYSE Composite
Pair Trading with Wells Fargo and NYSE Composite
The main advantage of trading using opposite Wells Fargo and NYSE Composite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wells Fargo position performs unexpectedly, NYSE Composite 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 NYSE Composite will offset losses from the drop in NYSE Composite's long position.The idea behind Wells Fargo and NYSE Composite pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| NYSE Composite vs. Getty Realty | NYSE Composite vs. American Video Teleconferencing | NYSE Composite vs. Warner Music Group | NYSE Composite vs. Arrow Electronics |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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