Correlation Between Wells Fargo and American Beacon
Can any of the company-specific risk be diversified away by investing in both Wells Fargo and American Beacon 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 Wells Fargo and American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wells Fargo Special and American Beacon Mid Cap, you can compare the effects of market volatilities on Wells Fargo and American Beacon 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 Wells Fargo with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wells Fargo and American Beacon.
Diversification Opportunities for Wells Fargo and American Beacon
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Wells and American is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Wells Fargo Special and American Beacon Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Mid and Wells Fargo 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 Wells Fargo Special are associated (or correlated) with American Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Beacon Mid has no effect on the direction of Wells Fargo i.e., Wells Fargo and American Beacon go up and down completely randomly.
Pair Corralation between Wells Fargo and American Beacon
If you would invest (100.00) in American Beacon Mid Cap on January 26, 2024 and sell it today you would earn a total of 100.00 from holding American Beacon Mid Cap or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Wells Fargo Special vs. American Beacon Mid Cap
Performance |
| Timeline |
| Wells Fargo Special |
| American Beacon Mid |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Wells Fargo and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wells Fargo and American Beacon
The main advantage of trading using opposite Wells Fargo and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wells Fargo position performs unexpectedly, American Beacon 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 American Beacon will offset losses from the drop in American Beacon's long position.| Wells Fargo vs. Fidelity Low Priced Stock | Wells Fargo vs. Vanguard Mid Cap Value | Wells Fargo vs. Jpmorgan Mid Cap |
| American Beacon vs. Lord Abbett Diversified | American Beacon vs. Fidelity Advisor Diversified | American Beacon vs. Elfun Diversified Fund | American Beacon vs. Delaware Limited Term Diversified |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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