Correlation Between Lincoln National and Wells Fargo
Can any of the company-specific risk be diversified away by investing in both Lincoln National 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 Lincoln National and Wells Fargo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lincoln National and Wells Fargo, you can compare the effects of market volatilities on Lincoln National 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 Lincoln National with a short position of Wells Fargo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lincoln National and Wells Fargo.
Diversification Opportunities for Lincoln National and Wells Fargo
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lincoln and Wells is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Lincoln National and Wells Fargo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wells Fargo and Lincoln National 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 Lincoln National 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 Lincoln National i.e., Lincoln National and Wells Fargo go up and down completely randomly.
Pair Corralation between Lincoln National and Wells Fargo
Considering the 90-day investment horizon Lincoln National is expected to generate 13.09 times less return on investment than Wells Fargo. In addition to that, Lincoln National is 1.68 times more volatile than Wells Fargo. It trades about 0.01 of its total potential returns per unit of risk. Wells Fargo is currently generating about 0.24 per unit of volatility. If you would invest 4,819 in Wells Fargo on January 20, 2024 and sell it today you would earn a total of 1,055 from holding Wells Fargo or generate 21.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.41% |
| Values | Daily Returns |
Lincoln National vs. Wells Fargo
Performance |
| Timeline |
| Lincoln National |
| Wells Fargo |
Lincoln National and Wells Fargo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lincoln National and Wells Fargo
The main advantage of trading using opposite Lincoln National and Wells Fargo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lincoln National 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.| Lincoln National vs. MetLife | Lincoln National vs. Aflac Incorporated | Lincoln National vs. Unum Group | Lincoln National vs. Manulife Financial Corp |
| 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |