Correlation Between Intel and Wells Fargo

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

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

Diversification Opportunities for Intel and Wells Fargo

0.35

Correlation Coefficient

Intel  Wells Fargo

Weak diversification

The 3 months correlation between Intel and Wells is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Intel and Wells Fargo Advantage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wells Fargo Advantage and Intel 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 Intel 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 Advantage has no effect on the direction of Intel i.e., Intel and Wells Fargo go up and down completely randomly.

Pair Corralation between Intel and Wells Fargo

Given the investment horizon of 90 days Intel is expected to under-perform the Wells Fargo. In addition to that, Intel is 11.08 times more volatile than Wells Fargo Advantage. It trades about 0.0 of its total potential returns per unit of risk. Wells Fargo Advantage is currently generating about 0.09 per unit of volatility. If you would invest  856.00  in Wells Fargo Advantage on December 4, 2024 and sell it today you would earn a total of  105.00  from holding Wells Fargo Advantage or generate 12.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Intel  vs.  Wells Fargo Advantage

Intel

Risk-Adjusted Performance

Weak

Over the last 90 days Intel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Intel is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Wells Fargo Advantage

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wells Fargo Advantage has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward 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 Intel and Wells Fargo

The main advantage of trading using opposite Intel and Wells Fargo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intel 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 Intel and Wells Fargo Advantage 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.