Correlation Between Aquila Three and Wells Fargo

Can any of the company-specific risk be diversified away by investing in both Aquila Three 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 Aquila Three and Wells Fargo into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aquila Three Peaks and Wells Fargo Mon, you can compare the effects of market volatilities on Aquila Three 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 Aquila Three with a short position of Wells Fargo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aquila Three and Wells Fargo.

Diversification Opportunities for Aquila Three and Wells Fargo

0.96

Correlation Coefficient

Aquila Three  Wells Fargo

Almost no diversification

The 3 months correlation between Aquila and Wells is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Aquila Three Peaks and Wells Fargo Mon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wells Fargo Mon and Aquila Three 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 Aquila Three Peaks 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 Mon has no effect on the direction of Aquila Three i.e., Aquila Three and Wells Fargo go up and down completely randomly.

Pair Corralation between Aquila Three and Wells Fargo

Assuming the 90 days horizon Aquila Three Peaks is expected to generate 0.77 times more return on investment than Wells Fargo. However, Aquila Three Peaks is 1.3 times less risky than Wells Fargo. It trades about 0.34 of its potential returns per unit of risk. Wells Fargo Mon is currently generating about 0.22 per unit of risk. If you would invest  3,368  in Aquila Three Peaks on April 30, 2025 and sell it today you would earn a total of  565.00  from holding Aquila Three Peaks or generate 16.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.39%
Values	Daily Returns

Aquila Three Peaks  vs.  Wells Fargo Mon

Aquila Three Peaks

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Aquila Three Peaks are ranked lower than 26 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Aquila Three showed solid returns over the last few months and may actually be approaching a breakup point.

Wells Fargo Mon

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Wells Fargo Mon are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Wells Fargo showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aquila Three and Wells Fargo

The main advantage of trading using opposite Aquila Three and Wells Fargo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aquila Three 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.

The idea behind Aquila Three Peaks and Wells Fargo Mon pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Bonds Directory module to find actively traded corporate debentures issued by US companies.