Correlation Between Butterfly Network and Wells Fargo

Can any of the company-specific risk be diversified away by investing in both Butterfly Network 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 Butterfly Network and Wells Fargo into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Butterfly Network and Wells Fargo Special, you can compare the effects of market volatilities on Butterfly Network 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 Butterfly Network with a short position of Wells Fargo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Butterfly Network and Wells Fargo.

Diversification Opportunities for Butterfly Network and Wells Fargo

-0.29

Correlation Coefficient

Butterfly Network  Wells Fargo

Very good diversification

The 3 months correlation between Butterfly and WELLS is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Butterfly Network and Wells Fargo Special in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wells Fargo Special and Butterfly Network 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 Butterfly Network 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 Special has no effect on the direction of Butterfly Network i.e., Butterfly Network and Wells Fargo go up and down completely randomly.

Pair Corralation between Butterfly Network and Wells Fargo

If you would invest  4,525  in Wells Fargo Special on January 17, 2024 and sell it today you would earn a total of  0.00  from holding Wells Fargo Special or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	4.76%
Values	Daily Returns

Butterfly Network  vs.  Wells Fargo Special

Butterfly Network

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Butterfly Network has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, Butterfly Network is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Wells Fargo Special

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wells Fargo Special has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical indicators, Wells Fargo is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Butterfly Network and Wells Fargo

The main advantage of trading using opposite Butterfly Network and Wells Fargo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Butterfly Network 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 Butterfly Network and Wells Fargo Special 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.