Correlation Between Global X and Wells Fargo
Can any of the company-specific risk be diversified away by investing in both Global X 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 Global X and Wells Fargo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Lithium and Wells Fargo Endeavor, you can compare the effects of market volatilities on Global X 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 Global X with a short position of Wells Fargo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Wells Fargo.
Diversification Opportunities for Global X and Wells Fargo
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Global and Wells is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Global X Lithium and Wells Fargo Endeavor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wells Fargo Endeavor and Global X 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 Global X Lithium 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 Endeavor has no effect on the direction of Global X i.e., Global X and Wells Fargo go up and down completely randomly.
Pair Corralation between Global X and Wells Fargo
Considering the 90-day investment horizon Global X Lithium is expected to under-perform the Wells Fargo. In addition to that, Global X is 1.57 times more volatile than Wells Fargo Endeavor. It trades about -0.12 of its total potential returns per unit of risk. Wells Fargo Endeavor is currently generating about 0.07 per unit of volatility. If you would invest 812.00 in Wells Fargo Endeavor on January 24, 2024 and sell it today you would earn a total of 113.00 from holding Wells Fargo Endeavor or generate 13.92% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 99.46% |
Values | Daily Returns |
Global X Lithium vs. Wells Fargo Endeavor
Performance |
Timeline |
Global X Lithium |
Wells Fargo Endeavor |
Global X and Wells Fargo Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Global X and Wells Fargo
The main advantage of trading using opposite Global X and Wells Fargo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X 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 Global X Lithium and Wells Fargo Endeavor 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.Wells Fargo vs. Wells Fargo Advantage | Wells Fargo vs. Wells Fargo Advantage | Wells Fargo vs. Wells Fargo Advantage | Wells Fargo vs. Wells Fargo Ultra |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
FinTech Suite Use AI to screen and filter profitable investment opportunities | |
Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets |