Correlation Between Foxx Development and Wells Fargo

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

By analyzing existing cross correlation between Foxx Development Holdings and Wells Fargo, you can compare the effects of market volatilities on Foxx Development 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 Foxx Development with a short position of Wells Fargo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Foxx Development and Wells Fargo.

Diversification Opportunities for Foxx Development and Wells Fargo

-0.51

Correlation Coefficient

Foxx Development  Wells Fargo

Excellent diversification

The 3 months correlation between Foxx and Wells is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Foxx Development Holdings and Wells Fargo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wells Fargo and Foxx Development 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 Foxx Development Holdings 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 has no effect on the direction of Foxx Development i.e., Foxx Development and Wells Fargo go up and down completely randomly.

Pair Corralation between Foxx Development and Wells Fargo

Given the investment horizon of 90 days Foxx Development Holdings is expected to generate 7.91 times more return on investment than Wells Fargo. However, Foxx Development is 7.91 times more volatile than Wells Fargo. It trades about 0.0 of its potential returns per unit of risk. Wells Fargo is currently generating about -0.02 per unit of risk. If you would invest  549.00  in Foxx Development Holdings on October 11, 2024 and sell it today you would lose (46.00) from holding Foxx Development Holdings or give up 8.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Foxx Development Holdings  vs.  Wells Fargo

Foxx Development Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Foxx Development Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Wells Fargo

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Wells Fargo are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Wells Fargo exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Foxx Development and Wells Fargo

The main advantage of trading using opposite Foxx Development and Wells Fargo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Foxx Development 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.

The idea behind Foxx Development Holdings and Wells Fargo 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 Transaction History module to view history of all your transactions and understand their impact on performance.