Correlation Between Ligand Pharmaceuticals and Wells Fargo
Can any of the company-specific risk be diversified away by investing in both Ligand Pharmaceuticals 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 Ligand Pharmaceuticals and Wells Fargo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ligand Pharmaceuticals Tr and Wells Fargo, you can compare the effects of market volatilities on Ligand Pharmaceuticals 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 Ligand Pharmaceuticals with a short position of Wells Fargo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ligand Pharmaceuticals and Wells Fargo.
Diversification Opportunities for Ligand Pharmaceuticals and Wells Fargo
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Ligand and Wells is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Ligand Pharmaceuticals Tr and Wells Fargo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wells Fargo and Ligand Pharmaceuticals 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 Ligand Pharmaceuticals Tr 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 Ligand Pharmaceuticals i.e., Ligand Pharmaceuticals and Wells Fargo go up and down completely randomly.
Pair Corralation between Ligand Pharmaceuticals and Wells Fargo
Assuming the 90 days horizon Ligand Pharmaceuticals Tr is expected to under-perform the Wells Fargo. In addition to that, Ligand Pharmaceuticals is 7.33 times more volatile than Wells Fargo. It trades about -0.5 of its total potential returns per unit of risk. Wells Fargo is currently generating about 0.31 per unit of volatility. If you would invest 5,673 in Wells Fargo on January 25, 2024 and sell it today you would earn a total of 421.00 from holding Wells Fargo or generate 7.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 19.05% |
| Values | Daily Returns |
Ligand Pharmaceuticals Tr vs. Wells Fargo
Performance |
| Timeline |
| Ligand Pharmaceuticals |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Wells Fargo |
Ligand Pharmaceuticals and Wells Fargo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ligand Pharmaceuticals and Wells Fargo
The main advantage of trading using opposite Ligand Pharmaceuticals and Wells Fargo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ligand Pharmaceuticals 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.| Ligand Pharmaceuticals vs. Marathon Group Corp | Ligand Pharmaceuticals vs. Halitron | Ligand Pharmaceuticals vs. Icon Media Holdings | Ligand Pharmaceuticals vs. Protext Mobility |
| 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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