Correlation Between Wells Fargo and Dunham Emerging
Can any of the company-specific risk be diversified away by investing in both Wells Fargo and Dunham Emerging 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 Dunham Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wells Fargo Diversified and Dunham Emerging Markets, you can compare the effects of market volatilities on Wells Fargo and Dunham Emerging 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 Dunham Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wells Fargo and Dunham Emerging.
Diversification Opportunities for Wells Fargo and Dunham Emerging
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wells and Dunham is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Wells Fargo Diversified and Dunham Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dunham Emerging Markets 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 Diversified are associated (or correlated) with Dunham Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dunham Emerging Markets has no effect on the direction of Wells Fargo i.e., Wells Fargo and Dunham Emerging go up and down completely randomly.
Pair Corralation between Wells Fargo and Dunham Emerging
Assuming the 90 days horizon Wells Fargo Diversified is expected to generate 0.89 times more return on investment than Dunham Emerging. However, Wells Fargo Diversified is 1.12 times less risky than Dunham Emerging. It trades about 0.18 of its potential returns per unit of risk. Dunham Emerging Markets is currently generating about 0.13 per unit of risk. If you would invest 1,360 in Wells Fargo Diversified on June 5, 2025 and sell it today you would earn a total of 106.00 from holding Wells Fargo Diversified or generate 7.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wells Fargo Diversified vs. Dunham Emerging Markets
Performance |
| Timeline |
| Wells Fargo Diversified |
| Dunham Emerging Markets |
Wells Fargo and Dunham Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wells Fargo and Dunham Emerging
The main advantage of trading using opposite Wells Fargo and Dunham Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wells Fargo position performs unexpectedly, Dunham Emerging 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 Dunham Emerging will offset losses from the drop in Dunham Emerging's long position.| Wells Fargo vs. Franklin Natural Resources | Wells Fargo vs. Firsthand Alternative Energy | Wells Fargo vs. Ivy Natural Resources | Wells Fargo vs. Gmo Resources |
| Dunham Emerging vs. Goldman Sachs Inflation | Dunham Emerging vs. Great West Inflation Protected Securities | Dunham Emerging vs. Loomis Sayles Inflation | Dunham Emerging vs. Ab Bond Inflation |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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