Correlation Between CBrain AS and Wells Fargo
Can any of the company-specific risk be diversified away by investing in both CBrain AS 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 CBrain AS and Wells Fargo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between cBrain AS and Wells Fargo, you can compare the effects of market volatilities on CBrain AS 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 CBrain AS with a short position of Wells Fargo. Check out your portfolio center. Please also check ongoing floating volatility patterns of CBrain AS and Wells Fargo.
Diversification Opportunities for CBrain AS and Wells Fargo
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between CBrain and Wells is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding cBrain AS and Wells Fargo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wells Fargo and CBrain AS 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 cBrain AS 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 has no effect on the direction of CBrain AS i.e., CBrain AS and Wells Fargo go up and down completely randomly.
Pair Corralation between CBrain AS and Wells Fargo
Assuming the 90 days trading horizon cBrain AS is expected to under-perform the Wells Fargo. In addition to that, CBrain AS is 2.06 times more volatile than Wells Fargo. It trades about -0.31 of its total potential returns per unit of risk. Wells Fargo is currently generating about 0.14 per unit of volatility. If you would invest 5,701 in Wells Fargo on January 19, 2024 and sell it today you would earn a total of 173.00 from holding Wells Fargo or generate 3.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 90.91% |
| Values | Daily Returns |
cBrain AS vs. Wells Fargo
Performance |
| Timeline |
| cBrain AS |
| Wells Fargo |
CBrain AS and Wells Fargo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CBrain AS and Wells Fargo
The main advantage of trading using opposite CBrain AS and Wells Fargo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CBrain AS 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.| CBrain AS vs. ChemoMetec AS | CBrain AS vs. Ambu AS | CBrain AS vs. Genmab AS | CBrain AS vs. Zealand Pharma AS |
| Wells Fargo vs. Bank of America | Wells Fargo vs. JPMorgan Chase Co | Wells Fargo vs. Toronto Dominion Bank | Wells Fargo vs. Nu Holdings |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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