Correlation Between Truist Financial and Wells Fargo

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Can any of the company-specific risk be diversified away by investing in both Truist Financial 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 Truist Financial and Wells Fargo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Truist Financial and Wells Fargo, you can compare the effects of market volatilities on Truist Financial 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 Truist Financial with a short position of Wells Fargo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Truist Financial and Wells Fargo.

Diversification Opportunities for Truist Financial and Wells Fargo

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Truist and Wells is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Truist Financial and Wells Fargo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wells Fargo and Truist Financial 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 Truist Financial 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 Truist Financial i.e., Truist Financial and Wells Fargo go up and down completely randomly.

Pair Corralation between Truist Financial and Wells Fargo

If you would invest  3,567  in Wells Fargo on December 30, 2023 and sell it today you would earn a total of  2,229  from holding Wells Fargo or generate 62.49% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

Truist Financial  vs.  Wells Fargo

 Performance 
       Timeline  
Truist Financial 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days Truist Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental drivers, Truist Financial is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.
Wells Fargo 

Risk-Adjusted Performance

15 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Wells Fargo are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Wells Fargo exhibited solid returns over the last few months and may actually be approaching a breakup point.

Truist Financial and Wells Fargo Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Truist Financial and Wells Fargo

The main advantage of trading using opposite Truist Financial and Wells Fargo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Truist Financial 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.
The idea behind Truist Financial and Wells Fargo pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.

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