Correlation Between Wells Fargo and Citizens Community
Can any of the company-specific risk be diversified away by investing in both Wells Fargo and Citizens Community 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 Citizens Community into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wells Fargo and Citizens Community Bancorp, you can compare the effects of market volatilities on Wells Fargo and Citizens Community 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 Citizens Community. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wells Fargo and Citizens Community.
Diversification Opportunities for Wells Fargo and Citizens Community
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Wells and Citizens is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Wells Fargo and Citizens Community Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens Community 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 are associated (or correlated) with Citizens Community. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citizens Community has no effect on the direction of Wells Fargo i.e., Wells Fargo and Citizens Community go up and down completely randomly.
Pair Corralation between Wells Fargo and Citizens Community
Considering the 90-day investment horizon Wells Fargo is expected to generate 1.31 times more return on investment than Citizens Community. However, Wells Fargo is 1.31 times more volatile than Citizens Community Bancorp. It trades about 0.04 of its potential returns per unit of risk. Citizens Community Bancorp is currently generating about -0.09 per unit of risk. If you would invest 7,006 in Wells Fargo on December 28, 2024 and sell it today you would earn a total of 222.00 from holding Wells Fargo or generate 3.17% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Wells Fargo vs. Citizens Community Bancorp
Performance |
Timeline |
Wells Fargo |
Citizens Community |
Wells Fargo and Citizens Community Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Wells Fargo and Citizens Community
The main advantage of trading using opposite Wells Fargo and Citizens Community positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wells Fargo position performs unexpectedly, Citizens Community 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 Citizens Community will offset losses from the drop in Citizens Community's long position.Wells Fargo vs. PJT Partners | Wells Fargo vs. National Bank Holdings | Wells Fargo vs. FB Financial Corp | Wells Fargo vs. Northrim BanCorp |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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