Correlation Between Wells Fargo and Woori Financial

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

By analyzing existing cross correlation between Wells Fargo and Woori Financial Group, you can compare the effects of market volatilities on Wells Fargo and Woori Financial 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 Woori Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wells Fargo and Woori Financial.

Diversification Opportunities for Wells Fargo and Woori Financial

-0.26

Correlation Coefficient

Wells Fargo  Woori Financial

Very good diversification

The 3 months correlation between Wells and Woori is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Wells Fargo and Woori Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woori Financial Group 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 Woori Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woori Financial Group has no effect on the direction of Wells Fargo i.e., Wells Fargo and Woori Financial go up and down completely randomly.

Pair Corralation between Wells Fargo and Woori Financial

Considering the 90-day investment horizon Wells Fargo is expected to generate 1.06 times more return on investment than Woori Financial. However, Wells Fargo is 1.06 times more volatile than Woori Financial Group. It trades about 0.07 of its potential returns per unit of risk. Woori Financial Group is currently generating about 0.02 per unit of risk. If you would invest  4,373  in Wells Fargo on October 21, 2024 and sell it today you would earn a total of  3,335  from holding Wells Fargo or generate 76.26% return on investment over 90 days.

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

Wells Fargo  vs.  Woori Financial Group

Wells Fargo

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Wells Fargo are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, Wells Fargo exhibited solid returns over the last few months and may actually be approaching a breakup point.

Woori Financial Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Woori Financial Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Wells Fargo and Woori Financial

The main advantage of trading using opposite Wells Fargo and Woori Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wells Fargo position performs unexpectedly, Woori Financial 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 Woori Financial will offset losses from the drop in Woori Financial's long position.

The idea behind Wells Fargo and Woori Financial Group 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 CEOs Directory module to screen CEOs from public companies around the world.