Correlation Between Valeo SA and Wells Fargo
Can any of the company-specific risk be diversified away by investing in both Valeo SA 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 Valeo SA and Wells Fargo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Valeo SA and Wells Fargo, you can compare the effects of market volatilities on Valeo SA 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 Valeo SA with a short position of Wells Fargo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valeo SA and Wells Fargo.
Diversification Opportunities for Valeo SA and Wells Fargo
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Valeo and Wells is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Valeo SA and Wells Fargo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wells Fargo and Valeo SA 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 Valeo SA 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 Valeo SA i.e., Valeo SA and Wells Fargo go up and down completely randomly.
Pair Corralation between Valeo SA and Wells Fargo
Assuming the 90 days horizon Valeo SA is expected to generate 2.22 times more return on investment than Wells Fargo. However, Valeo SA is 2.22 times more volatile than Wells Fargo. It trades about 0.11 of its potential returns per unit of risk. Wells Fargo is currently generating about 0.02 per unit of risk. If you would invest 1,135 in Valeo SA on January 19, 2024 and sell it today you would earn a total of 45.00 from holding Valeo SA or generate 3.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Valeo SA vs. Wells Fargo
Performance |
| Timeline |
| Valeo SA |
| Wells Fargo |
Valeo SA and Wells Fargo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Valeo SA and Wells Fargo
The main advantage of trading using opposite Valeo SA and Wells Fargo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valeo SA 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.| Valeo SA vs. Compagnie Generale des | Valeo SA vs. Renault SA | Valeo SA vs. Atos SE | Valeo SA vs. Compagnie de Saint Gobain |
| Wells Fargo vs. Bank of America | Wells Fargo vs. Toronto Dominion Bank | Wells Fargo vs. Nu Holdings | Wells Fargo vs. Royal Bank of |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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