Correlation Between Vestas Wind and Wells Fargo
Can any of the company-specific risk be diversified away by investing in both Vestas Wind 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 Vestas Wind and Wells Fargo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vestas Wind Systems and Wells Fargo, you can compare the effects of market volatilities on Vestas Wind 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 Vestas Wind with a short position of Wells Fargo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vestas Wind and Wells Fargo.
Diversification Opportunities for Vestas Wind and Wells Fargo
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Vestas and Wells is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Vestas Wind Systems and Wells Fargo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wells Fargo and Vestas Wind 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 Vestas Wind Systems 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 Vestas Wind i.e., Vestas Wind and Wells Fargo go up and down completely randomly.
Pair Corralation between Vestas Wind and Wells Fargo
Assuming the 90 days trading horizon Vestas Wind Systems is expected to under-perform the Wells Fargo. In addition to that, Vestas Wind is 1.49 times more volatile than Wells Fargo. It trades about -0.22 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 Against |
| Strength | Insignificant |
| Accuracy | 90.48% |
| Values | Daily Returns |
Vestas Wind Systems vs. Wells Fargo
Performance |
| Timeline |
| Vestas Wind Systems |
| Wells Fargo |
Vestas Wind and Wells Fargo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vestas Wind and Wells Fargo
The main advantage of trading using opposite Vestas Wind and Wells Fargo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vestas Wind 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.| Vestas Wind vs. Genmab AS | Vestas Wind vs. Danske Bank AS | Vestas Wind vs. Ambu AS | Vestas Wind vs. Bavarian Nordic |
| 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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