Correlation Between Wells Fargo and Gold
Can any of the company-specific risk be diversified away by investing in both Wells Fargo and Gold 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 Wells Fargo and Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wells Fargo Large and Gold And Precious, you can compare the effects of market volatilities on Wells Fargo and Gold 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 Wells Fargo with a short position of Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wells Fargo and Gold.
Diversification Opportunities for Wells Fargo and Gold
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Wells and Gold is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Wells Fargo Large and Gold And Precious in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold And Precious and Wells Fargo 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 Wells Fargo Large are associated (or correlated) with Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold And Precious has no effect on the direction of Wells Fargo i.e., Wells Fargo and Gold go up and down completely randomly.
Pair Corralation between Wells Fargo and Gold
Assuming the 90 days horizon Wells Fargo is expected to generate 2.97 times less return on investment than Gold. But when comparing it to its historical volatility, Wells Fargo Large is 2.56 times less risky than Gold. It trades about 0.16 of its potential returns per unit of risk. Gold And Precious is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1,166 in Gold And Precious on December 5, 2024 and sell it today you would earn a total of 133.00 from holding Gold And Precious or generate 11.41% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 97.5% |
Values | Daily Returns |
Wells Fargo Large vs. Gold And Precious
Performance |
Timeline |
Wells Fargo Large |
Gold And Precious |
Wells Fargo and Gold Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Wells Fargo and Gold
The main advantage of trading using opposite Wells Fargo and Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wells Fargo position performs unexpectedly, Gold 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 Gold will offset losses from the drop in Gold's long position.Wells Fargo vs. Sterling Capital Total | Wells Fargo vs. Sterling Capital Total | Wells Fargo vs. Sterling Capital Total | Wells Fargo vs. Sterling Capital Intermediate |
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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