Correlation Between Wells Fargo and FIRST REP
Can any of the company-specific risk be diversified away by investing in both Wells Fargo and FIRST REP 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 FIRST REP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wells Fargo and FIRST REP BK, you can compare the effects of market volatilities on Wells Fargo and FIRST REP 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 FIRST REP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wells Fargo and FIRST REP.
Diversification Opportunities for Wells Fargo and FIRST REP
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Wells and FIRST is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Wells Fargo and FIRST REP BK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIRST REP BK 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 FIRST REP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIRST REP BK has no effect on the direction of Wells Fargo i.e., Wells Fargo and FIRST REP go up and down completely randomly.
Pair Corralation between Wells Fargo and FIRST REP
Considering the 90-day investment horizon Wells Fargo is expected to generate 0.17 times more return on investment than FIRST REP. However, Wells Fargo is 5.78 times less risky than FIRST REP. It trades about 0.06 of its potential returns per unit of risk. FIRST REP BK is currently generating about -0.14 per unit of risk. If you would invest 3,991 in Wells Fargo on February 8, 2024 and sell it today you would earn a total of 2,035 from holding Wells Fargo or generate 50.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 48.69% |
| Values | Daily Returns |
Wells Fargo vs. FIRST REP BK
Performance |
| Timeline |
| Wells Fargo |
| FIRST REP BK |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Wells Fargo and FIRST REP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wells Fargo and FIRST REP
The main advantage of trading using opposite Wells Fargo and FIRST REP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wells Fargo position performs unexpectedly, FIRST REP 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 FIRST REP will offset losses from the drop in FIRST REP's long position.| Wells Fargo vs. Bank of America | Wells Fargo vs. JPMorgan Chase Co | Wells Fargo vs. Toronto Dominion Bank | Wells Fargo vs. Nu Holdings |
| FIRST REP vs. Zions Bancorporation | FIRST REP vs. KeyCorp | FIRST REP vs. Comerica | FIRST REP vs. First Horizon National |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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