Correlation Between Wells Fargo and Columbia Seligman
Can any of the company-specific risk be diversified away by investing in both Wells Fargo and Columbia Seligman 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 Columbia Seligman into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wells Fargo Specialized and Columbia Seligman Global, you can compare the effects of market volatilities on Wells Fargo and Columbia Seligman 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 Columbia Seligman. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wells Fargo and Columbia Seligman.
Diversification Opportunities for Wells Fargo and Columbia Seligman
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Wells and Columbia is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Wells Fargo Specialized and Columbia Seligman Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Seligman Global 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 Specialized are associated (or correlated) with Columbia Seligman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Seligman Global has no effect on the direction of Wells Fargo i.e., Wells Fargo and Columbia Seligman go up and down completely randomly.
Pair Corralation between Wells Fargo and Columbia Seligman
Assuming the 90 days horizon Wells Fargo Specialized is expected to under-perform the Columbia Seligman. But the mutual fund apears to be less risky and, when comparing its historical volatility, Wells Fargo Specialized is 1.2 times less risky than Columbia Seligman. The mutual fund trades about -0.38 of its potential returns per unit of risk. The Columbia Seligman Global is currently generating about -0.28 of returns per unit of risk over similar time horizon. If you would invest 7,371 in Columbia Seligman Global on January 21, 2024 and sell it today you would lose (439.00) from holding Columbia Seligman Global or give up 5.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wells Fargo Specialized vs. Columbia Seligman Global
Performance |
| Timeline |
| Wells Fargo Specialized |
| Columbia Seligman Global |
Wells Fargo and Columbia Seligman Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wells Fargo and Columbia Seligman
The main advantage of trading using opposite Wells Fargo and Columbia Seligman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wells Fargo position performs unexpectedly, Columbia Seligman 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 Columbia Seligman will offset losses from the drop in Columbia Seligman's long position.| Wells Fargo vs. VHAI | Wells Fargo vs. Viscount Systems | Wells Fargo vs. VivoPower International PLC | Wells Fargo vs. Exela Technologies Preferred |
| Columbia Seligman vs. Federated Equity Income | Columbia Seligman vs. Qs Growth Fund | Columbia Seligman vs. Qs Large Cap | Columbia Seligman vs. Eic Value Fund |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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