Correlation Between Growth Fund and Wells Fargo

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

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

Diversification Opportunities for Growth Fund and Wells Fargo

0.89

Correlation Coefficient

Growth Fund  Wells Fargo

Very poor diversification

The 3 months correlation between Growth and Wells is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Growth Fund Of and Wells Fargo Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wells Fargo Growth and Growth Fund 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 Growth Fund Of 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 Growth has no effect on the direction of Growth Fund i.e., Growth Fund and Wells Fargo go up and down completely randomly.

Pair Corralation between Growth Fund and Wells Fargo

Assuming the 90 days horizon Growth Fund Of is expected to generate 0.76 times more return on investment than Wells Fargo. However, Growth Fund Of is 1.32 times less risky than Wells Fargo. It trades about -0.08 of its potential returns per unit of risk. Wells Fargo Growth is currently generating about -0.1 per unit of risk. If you would invest  6,419  in Growth Fund Of on December 29, 2024 and sell it today you would lose (450.00) from holding Growth Fund Of or give up 7.01% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.39%
Values	Daily Returns

Growth Fund Of  vs.  Wells Fargo Growth

Growth Fund

Risk-Adjusted Performance

Very Weak

Over the last 90 days Growth Fund Of has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Wells Fargo Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wells Fargo Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Growth Fund and Wells Fargo

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

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.