Correlation Between Mayfair Gold and WELLS

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

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

Diversification Opportunities for Mayfair Gold and WELLS

0.12

Correlation Coefficient

Mayfair Gold  WELLS

Average diversification

The 3 months correlation between Mayfair and WELLS is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Mayfair Gold Corp and WELLS FARGO BK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WELLS FARGO BK and Mayfair Gold 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 Mayfair Gold Corp 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 BK has no effect on the direction of Mayfair Gold i.e., Mayfair Gold and WELLS go up and down completely randomly.

Pair Corralation between Mayfair Gold and WELLS

Assuming the 90 days horizon Mayfair Gold Corp is expected to under-perform the WELLS. In addition to that, Mayfair Gold is 5.72 times more volatile than WELLS FARGO BK. It trades about -0.05 of its total potential returns per unit of risk. WELLS FARGO BK is currently generating about 0.22 per unit of volatility. If you would invest  10,397  in WELLS FARGO BK on December 2, 2024 and sell it today you would earn a total of  134.00  from holding WELLS FARGO BK or generate 1.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	42.86%
Values	Daily Returns

Mayfair Gold Corp  vs.  WELLS FARGO BK

Mayfair Gold Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mayfair Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

WELLS FARGO BK

Risk-Adjusted Performance

Very Weak

Over the last 90 days WELLS FARGO BK has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, WELLS is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Mayfair Gold and WELLS

The main advantage of trading using opposite Mayfair Gold and WELLS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mayfair Gold 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 Mayfair Gold Corp and WELLS FARGO BK 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.