Correlation Between Gabelli Convertible and Wells Fargo

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

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

Diversification Opportunities for Gabelli Convertible and Wells Fargo

0.28

Correlation Coefficient

Gabelli Convertible  Wells Fargo

Modest diversification

The 3 months correlation between Gabelli and Wells is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Gabelli Convertible And and Wells Fargo Discovery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wells Fargo Discovery and Gabelli Convertible 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 Gabelli Convertible And 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 Discovery has no effect on the direction of Gabelli Convertible i.e., Gabelli Convertible and Wells Fargo go up and down completely randomly.

Pair Corralation between Gabelli Convertible and Wells Fargo

Considering the 90-day investment horizon Gabelli Convertible is expected to generate 18.62 times less return on investment than Wells Fargo. But when comparing it to its historical volatility, Gabelli Convertible And is 1.06 times less risky than Wells Fargo. It trades about 0.0 of its potential returns per unit of risk. Wells Fargo Discovery is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,063  in Wells Fargo Discovery on October 10, 2024 and sell it today you would earn a total of  534.00  from holding Wells Fargo Discovery or generate 25.88% return on investment over 90 days.

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

Gabelli Convertible And  vs.  Wells Fargo Discovery

Gabelli Convertible And

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gabelli Convertible And are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Gabelli Convertible may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Wells Fargo Discovery

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wells Fargo Discovery has generated negative risk-adjusted returns adding no value to fund investors. 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.

Pair Trading with Gabelli Convertible and Wells Fargo

The main advantage of trading using opposite Gabelli Convertible and Wells Fargo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gabelli Convertible 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 Gabelli Convertible And and Wells Fargo Discovery 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.