Correlation Between Wells Fargo and AMERITRUST CORP

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

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

Diversification Opportunities for Wells Fargo and AMERITRUST CORP

0.0
  Correlation Coefficient
Wells Fargo
AMERITRUST CORP

Pay attention - limited upside

The 3 months correlation between Wells and AMERITRUST is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Wells Fargo and AMERITRUST CORP in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on AMERITRUST CORP 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 are associated (or correlated) with AMERITRUST CORP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMERITRUST CORP has no effect on the direction of Wells Fargo i.e., Wells Fargo and AMERITRUST CORP go up and down completely randomly.

Pair Corralation between Wells Fargo and AMERITRUST CORP

If you would invest (100.00)  in Wells Fargo on September 10, 2021 and sell it today you would earn a total of  100.00  from holding Wells Fargo or generate -100.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

Wells Fargo  vs.  AMERITRUST CORP

 Performance (%) 
      Timeline 
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. In spite of very healthy basic indicators, Wells Fargo is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the insiders.
AMERITRUST CORP 
AMERITRUST Performance
8 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in AMERITRUST CORP are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, AMERITRUST CORP sustained solid returns over the last few months and may actually be approaching a breakup point.

AMERITRUST Price Channel

Wells Fargo and AMERITRUST CORP Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Wells Fargo and AMERITRUST CORP

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

Wells Fargo

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The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Wells Fargo as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Wells Fargo's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Wells Fargo's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Wells Fargo.
The idea behind Wells Fargo and AMERITRUST CORP 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.

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