Correlation Between Bunge and Wells Fargo
Can any of the company-specific risk be diversified away by investing in both Bunge 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 Bunge and Wells Fargo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bunge Limited and Wells Fargo, you can compare the effects of market volatilities on Bunge 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 Bunge with a short position of Wells Fargo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bunge and Wells Fargo.
Diversification Opportunities for Bunge and Wells Fargo
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bunge and Wells is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Bunge Limited and Wells Fargo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wells Fargo and Bunge 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 Bunge Limited 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 has no effect on the direction of Bunge i.e., Bunge and Wells Fargo go up and down completely randomly.
Pair Corralation between Bunge and Wells Fargo
Allowing for the 90-day total investment horizon Bunge Limited is expected to generate 1.5 times more return on investment than Wells Fargo. However, Bunge is 1.5 times more volatile than Wells Fargo. It trades about 0.31 of its potential returns per unit of risk. Wells Fargo is currently generating about 0.3 per unit of risk. If you would invest 9,374 in Bunge Limited on December 30, 2023 and sell it today you would earn a total of 878.00 from holding Bunge Limited or generate 9.37% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Bunge Limited vs. Wells Fargo
Performance |
Timeline |
Bunge Limited |
Wells Fargo |
Bunge and Wells Fargo Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bunge and Wells Fargo
The main advantage of trading using opposite Bunge and Wells Fargo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bunge 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.Bunge vs. Dole PLC | Bunge vs. Davis Commodities Limited | Bunge vs. Edible Garden AG | Bunge vs. Edible Garden AG |
Wells Fargo vs. Walt Disney | Wells Fargo vs. General Electric | Wells Fargo vs. McDonalds | Wells Fargo vs. International Business Machines |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
Other Complementary Tools
Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
Money Managers Screen money managers from public funds and ETFs managed around the world | |
Content Syndication Quickly integrate customizable finance content to your own investment portal | |
Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. |