Correlation Between Ford and Wells Fargo

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

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

Diversification Opportunities for Ford and Wells Fargo

0.0
  Correlation Coefficient
Ford Motor
Wells Fargo

Pay attention - limited upside

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

Pair Corralation between Ford and Wells Fargo

If you would invest  1,939  in Ford Motor on October 20, 2021 and sell it today you would earn a total of  580.00  from holding Ford Motor or generate 29.91% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy2.5%
ValuesDaily Returns

Ford Motor  vs.  Wells Fargo

 Performance (%) 
      Timeline 
Ford Motor 
Ford Performance
18 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Ford Motor are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather sluggish technical and fundamental indicators, Ford exhibited solid returns over the last few months and may actually be approaching a breakup point.

Ford Price Channel

Wells Fargo 
Wells Performance
0 of 100
Over the last 90 days Wells Fargo has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Wells Fargo is not utilizing all of its potentials. The new stock price agitation, may contribute to short-term losses for the retail investors.

Ford and Wells Fargo Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Ford and Wells Fargo

The main advantage of trading using opposite Ford and Wells Fargo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford 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 Ford Motor 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.
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.

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