Correlation Between Vanguard Total and Wells Fargo

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

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

Diversification Opportunities for Vanguard Total and Wells Fargo

-0.31

Correlation Coefficient

Vanguard Total  Wells Fargo

Very good diversification

The 3 months correlation between Vanguard and Wells is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total International and Wells Fargo Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wells Fargo Funds and Vanguard Total 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 Vanguard Total International 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 Funds has no effect on the direction of Vanguard Total i.e., Vanguard Total and Wells Fargo go up and down completely randomly.

Pair Corralation between Vanguard Total and Wells Fargo

Assuming the 90 days horizon Vanguard Total International is expected to generate 2.59 times more return on investment than Wells Fargo. However, Vanguard Total is 2.59 times more volatile than Wells Fargo Funds. It trades about 0.02 of its potential returns per unit of risk. Wells Fargo Funds is currently generating about 0.06 per unit of risk. If you would invest  1,787  in Vanguard Total International on September 24, 2024 and sell it today you would earn a total of  103.00  from holding Vanguard Total International or generate 5.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.88%
Values	Daily Returns

Vanguard Total International  vs.  Wells Fargo Funds

Vanguard Total Inter

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard Total International has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Wells Fargo Funds

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Wells Fargo Funds are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic 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 Vanguard Total and Wells Fargo

The main advantage of trading using opposite Vanguard Total and Wells Fargo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Total 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 Vanguard Total International and Wells Fargo Funds 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.