Correlation Between Wells Fargo and Curasset Capital

Can any of the company-specific risk be diversified away by investing in both Wells Fargo and Curasset Capital 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 Curasset Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Wells Fargo High and Curasset Capital Management, you can compare the effects of market volatilities on Wells Fargo and Curasset Capital 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 Curasset Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wells Fargo and Curasset Capital.

Diversification Opportunities for Wells Fargo and Curasset Capital

0.08

Correlation Coefficient

Wells Fargo  Curasset Capital

Significant diversification

The 3 months correlation between Wells and Curasset is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Wells Fargo High and Curasset Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Curasset Capital Man 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 High are associated (or correlated) with Curasset Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Curasset Capital Man has no effect on the direction of Wells Fargo i.e., Wells Fargo and Curasset Capital go up and down completely randomly.

Pair Corralation between Wells Fargo and Curasset Capital

Assuming the 90 days horizon Wells Fargo High is expected to generate 0.69 times more return on investment than Curasset Capital. However, Wells Fargo High is 1.44 times less risky than Curasset Capital. It trades about 0.11 of its potential returns per unit of risk. Curasset Capital Management is currently generating about -0.12 per unit of risk. If you would invest  300.00  in Wells Fargo High on October 6, 2024 and sell it today you would earn a total of  3.00  from holding Wells Fargo High or generate 1.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Wells Fargo High  vs.  Curasset Capital Management

Wells Fargo High

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Wells Fargo High are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Wells Fargo is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Curasset Capital Man

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Curasset Capital Management has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Curasset Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Wells Fargo and Curasset Capital

The main advantage of trading using opposite Wells Fargo and Curasset Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wells Fargo position performs unexpectedly, Curasset Capital 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 Curasset Capital will offset losses from the drop in Curasset Capital's long position.

The idea behind Wells Fargo High and Curasset Capital Management 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.

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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.