Correlation Between Wells Fargo and Kraft Heinz
Can any of the company-specific risk be diversified away by investing in both Wells Fargo and Kraft Heinz 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 Kraft Heinz into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wells Fargo Advantage and Kraft Heinz Co, you can compare the effects of market volatilities on Wells Fargo and Kraft Heinz 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 Kraft Heinz. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wells Fargo and Kraft Heinz.
Diversification Opportunities for Wells Fargo and Kraft Heinz
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Wells and Kraft is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Wells Fargo Advantage and Kraft Heinz Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kraft Heinz 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 Advantage are associated (or correlated) with Kraft Heinz. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kraft Heinz has no effect on the direction of Wells Fargo i.e., Wells Fargo and Kraft Heinz go up and down completely randomly.
Pair Corralation between Wells Fargo and Kraft Heinz
Assuming the 90 days horizon Wells Fargo Advantage is expected to under-perform the Kraft Heinz. But the mutual fund apears to be less risky and, when comparing its historical volatility, Wells Fargo Advantage is 5.61 times less risky than Kraft Heinz. The mutual fund trades about -0.17 of its potential returns per unit of risk. The Kraft Heinz Co is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 3,527 in Kraft Heinz Co on January 19, 2024 and sell it today you would earn a total of 149.30 from holding Kraft Heinz Co or generate 4.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Wells Fargo Advantage vs. Kraft Heinz Co
Performance |
| Timeline |
| Wells Fargo Advantage |
| Kraft Heinz |
Wells Fargo and Kraft Heinz Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wells Fargo and Kraft Heinz
The main advantage of trading using opposite Wells Fargo and Kraft Heinz positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wells Fargo position performs unexpectedly, Kraft Heinz 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 Kraft Heinz will offset losses from the drop in Kraft Heinz's long position.| Wells Fargo vs. Vanguard Limited Term Tax Exempt | Wells Fargo vs. Vanguard Short Term Tax Exempt | Wells Fargo vs. Goldman Sachs Short | Wells Fargo vs. Diversified Municipal Portfolio |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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