Correlation Between Wells Fargo and US GOVERNMENT
Can any of the company-specific risk be diversified away by investing in both Wells Fargo and US GOVERNMENT 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 US GOVERNMENT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wells Fargo Government and US GOVERNMENT SECURITIES, you can compare the effects of market volatilities on Wells Fargo and US GOVERNMENT 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 US GOVERNMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wells Fargo and US GOVERNMENT.
Diversification Opportunities for Wells Fargo and US GOVERNMENT
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Wells and CAUKX is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Wells Fargo Government and US GOVERNMENT SECURITIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US GOVERNMENT SECURITIES 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 Government are associated (or correlated) with US GOVERNMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US GOVERNMENT SECURITIES has no effect on the direction of Wells Fargo i.e., Wells Fargo and US GOVERNMENT go up and down completely randomly.
Pair Corralation between Wells Fargo and US GOVERNMENT
Assuming the 90 days horizon Wells Fargo Government is expected to generate 0.85 times more return on investment than US GOVERNMENT. However, Wells Fargo Government is 1.17 times less risky than US GOVERNMENT. It trades about 0.0 of its potential returns per unit of risk. US GOVERNMENT SECURITIES is currently generating about -0.01 per unit of risk. If you would invest 986.00 in Wells Fargo Government on September 13, 2025 and sell it today you would earn a total of 0.00 from holding Wells Fargo Government or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wells Fargo Government vs. US GOVERNMENT SECURITIES
Performance |
| Timeline |
| Wells Fargo Government |
| US GOVERNMENT SECURITIES |
Wells Fargo and US GOVERNMENT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wells Fargo and US GOVERNMENT
The main advantage of trading using opposite Wells Fargo and US GOVERNMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wells Fargo position performs unexpectedly, US GOVERNMENT 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 US GOVERNMENT will offset losses from the drop in US GOVERNMENT's long position.| Wells Fargo vs. Ridgeworth Seix Government | Wells Fargo vs. Short Term Government Fund | Wells Fargo vs. Inverse Government Long | Wells Fargo vs. Wesmark Government Bond |
| US GOVERNMENT vs. Shelton International Select | US GOVERNMENT vs. Shelton International Select | US GOVERNMENT vs. Shelton Emerging Markets | US GOVERNMENT vs. Shelton Emerging Markets |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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