Correlation Between SKAGEN Global and Wells Fargo
Can any of the company-specific risk be diversified away by investing in both SKAGEN Global 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 SKAGEN Global and Wells Fargo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SKAGEN Global A and Wells Fargo, you can compare the effects of market volatilities on SKAGEN Global 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 SKAGEN Global with a short position of Wells Fargo. Check out your portfolio center. Please also check ongoing floating volatility patterns of SKAGEN Global and Wells Fargo.
Diversification Opportunities for SKAGEN Global and Wells Fargo
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SKAGEN and Wells is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding SKAGEN Global A and Wells Fargo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wells Fargo and SKAGEN Global 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 SKAGEN Global A 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 SKAGEN Global i.e., SKAGEN Global and Wells Fargo go up and down completely randomly.
Pair Corralation between SKAGEN Global and Wells Fargo
Assuming the 90 days trading horizon SKAGEN Global is expected to generate 20.86 times less return on investment than Wells Fargo. In addition to that, SKAGEN Global is 1.48 times more volatile than Wells Fargo. It trades about 0.0 of its total potential returns per unit of risk. Wells Fargo is currently generating about 0.04 per unit of volatility. If you would invest 4,269 in Wells Fargo on January 18, 2024 and sell it today you would earn a total of 1,449 from holding Wells Fargo or generate 33.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
SKAGEN Global A vs. Wells Fargo
Performance |
| Timeline |
| SKAGEN Global A |
| Wells Fargo |
SKAGEN Global and Wells Fargo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SKAGEN Global and Wells Fargo
The main advantage of trading using opposite SKAGEN Global and Wells Fargo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SKAGEN Global 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.| SKAGEN Global vs. Novo Nordisk AS | SKAGEN Global vs. Nordea Bank Abp | SKAGEN Global vs. DSV Panalpina AS | SKAGEN Global vs. AP Mller |
| 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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