Correlation Between Wells Fargo and Fidelity Income

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

By analyzing existing cross correlation between Wells Fargo Advantage and Fidelity Income Replacement, you can compare the effects of market volatilities on Wells Fargo and Fidelity Income 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 Fidelity Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wells Fargo and Fidelity Income.

Diversification Opportunities for Wells Fargo and Fidelity Income

0.51

Correlation Coefficient

Wells Fargo  Fidelity Income

Very weak diversification

The 3 months correlation between Wells and Fidelity is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Wells Fargo Advantage and Fidelity Income Replacement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Me Replacement 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 Advantage are associated (or correlated) with Fidelity Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Me Replacement has no effect on the direction of Wells Fargo i.e., Wells Fargo and Fidelity Income go up and down completely randomly.

Pair Corralation between Wells Fargo and Fidelity Income

If you would invest  989.00  in Wells Fargo Advantage on January 26, 2024 and sell it today you would earn a total of  0.00  from holding Wells Fargo Advantage or generate 0.0% return on investment over 90 days.

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

Wells Fargo Advantage  vs.  Fidelity Income Replacement

Wells Fargo Advantage

Risk-Adjusted Performance

0 of 100

Weak

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

Fidelity Me Replacement

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Wells Fargo and Fidelity Income

The main advantage of trading using opposite Wells Fargo and Fidelity Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wells Fargo position performs unexpectedly, Fidelity Income 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 Fidelity Income will offset losses from the drop in Fidelity Income's long position.

The idea behind Wells Fargo Advantage and Fidelity Income Replacement 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.