Correlation Between US Global and WELLS

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

By analyzing existing cross correlation between US Global Investors and WELLS FARGO NEW, you can compare the effects of market volatilities on US Global and WELLS 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 US Global with a short position of WELLS. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Global and WELLS.

Diversification Opportunities for US Global and WELLS

-0.05

Correlation Coefficient

US Global  WELLS

Good diversification

The 3 months correlation between GROW and WELLS is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding US Global Investors and WELLS FARGO NEW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WELLS FARGO NEW and US Global 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 US Global Investors are associated (or correlated) with WELLS. 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 NEW has no effect on the direction of US Global i.e., US Global and WELLS go up and down completely randomly.

Pair Corralation between US Global and WELLS

Given the investment horizon of 90 days US Global Investors is expected to under-perform the WELLS. In addition to that, US Global is 1.55 times more volatile than WELLS FARGO NEW. It trades about -0.07 of its total potential returns per unit of risk. WELLS FARGO NEW is currently generating about 0.07 per unit of volatility. If you would invest  8,432  in WELLS FARGO NEW on December 30, 2024 and sell it today you would earn a total of  281.00  from holding WELLS FARGO NEW or generate 3.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

US Global Investors  vs.  WELLS FARGO NEW

US Global Investors

Risk-Adjusted Performance

Very Weak

Over the last 90 days US Global Investors has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, US Global is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

WELLS FARGO NEW

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in WELLS FARGO NEW are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, WELLS is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with US Global and WELLS

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

The idea behind US Global Investors and WELLS FARGO NEW 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.