Correlation Between Wells Fargo and Old National
Can any of the company-specific risk be diversified away by investing in both Wells Fargo and Old National 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 Old National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wells Fargo and Old National Bancorp, you can compare the effects of market volatilities on Wells Fargo and Old National 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 Old National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wells Fargo and Old National.
Diversification Opportunities for Wells Fargo and Old National
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Wells and Old is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Wells Fargo and Old National Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old National Bancorp 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 Old National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old National Bancorp has no effect on the direction of Wells Fargo i.e., Wells Fargo and Old National go up and down completely randomly.
Pair Corralation between Wells Fargo and Old National
Considering the 90-day investment horizon Wells Fargo is expected to generate 0.95 times more return on investment than Old National. However, Wells Fargo is 1.05 times less risky than Old National. It trades about 0.04 of its potential returns per unit of risk. Old National Bancorp is currently generating about -0.01 per unit of risk. If you would invest 7,141 in Wells Fargo on December 26, 2024 and sell it today you would earn a total of 283.00 from holding Wells Fargo or generate 3.96% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Wells Fargo vs. Old National Bancorp
Performance |
Timeline |
Wells Fargo |
Old National Bancorp |
Wells Fargo and Old National Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Wells Fargo and Old National
The main advantage of trading using opposite Wells Fargo and Old National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wells Fargo position performs unexpectedly, Old National 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 Old National will offset losses from the drop in Old National'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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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