Correlation Between Putnman Retirement and Wells Fargo

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

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

Diversification Opportunities for Putnman Retirement and Wells Fargo

0.56

Correlation Coefficient

Putnman Retirement  Wells Fargo

Very weak diversification

The 3 months correlation between Putnman and Wells is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Putnman Retirement Ready and Wells Fargo Alternative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wells Fargo Alternative and Putnman Retirement 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 Putnman Retirement Ready 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 Alternative has no effect on the direction of Putnman Retirement i.e., Putnman Retirement and Wells Fargo go up and down completely randomly.

Pair Corralation between Putnman Retirement and Wells Fargo

Assuming the 90 days horizon Putnman Retirement is expected to generate 30.67 times less return on investment than Wells Fargo. In addition to that, Putnman Retirement is 1.08 times more volatile than Wells Fargo Alternative. It trades about 0.01 of its total potential returns per unit of risk. Wells Fargo Alternative is currently generating about 0.18 per unit of volatility. If you would invest  814.00  in Wells Fargo Alternative on September 15, 2024 and sell it today you would earn a total of  29.00  from holding Wells Fargo Alternative or generate 3.56% return on investment over 90 days.

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

Putnman Retirement Ready  vs.  Wells Fargo Alternative

Putnman Retirement Ready

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Putnman Retirement Ready has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Putnman Retirement is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Wells Fargo Alternative

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Wells Fargo Alternative are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. 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 Putnman Retirement and Wells Fargo

The main advantage of trading using opposite Putnman Retirement and Wells Fargo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnman Retirement 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 Putnman Retirement Ready and Wells Fargo Alternative 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.