Correlation Between Wells Fargo and Calvert Smallmid

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

By analyzing existing cross correlation between Wells Fargo Global and Calvert Smallmid Cap A, you can compare the effects of market volatilities on Wells Fargo and Calvert Smallmid 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 Calvert Smallmid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wells Fargo and Calvert Smallmid.

Diversification Opportunities for Wells Fargo and Calvert Smallmid

0.68

Correlation Coefficient

Wells Fargo  Calvert Smallmid

Poor diversification

The 3 months correlation between Wells and Calvert is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Wells Fargo Global and Calvert Smallmid Cap A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calvert Smallmid Cap 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 Global are associated (or correlated) with Calvert Smallmid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calvert Smallmid Cap has no effect on the direction of Wells Fargo i.e., Wells Fargo and Calvert Smallmid go up and down completely randomly.

Pair Corralation between Wells Fargo and Calvert Smallmid

Assuming the 90 days horizon Wells Fargo is expected to generate 1.76 times less return on investment than Calvert Smallmid. But when comparing it to its historical volatility, Wells Fargo Global is 1.03 times less risky than Calvert Smallmid. It trades about 0.05 of its potential returns per unit of risk. Calvert Smallmid Cap A is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2,406  in Calvert Smallmid Cap A on May 4, 2025 and sell it today you would earn a total of  121.00  from holding Calvert Smallmid Cap A or generate 5.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Wells Fargo Global  vs.  Calvert Smallmid Cap A

Wells Fargo Global

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Wells Fargo Global are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Wells Fargo is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Calvert Smallmid Cap

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Calvert Smallmid Cap A are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Calvert Smallmid is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Wells Fargo and Calvert Smallmid

The main advantage of trading using opposite Wells Fargo and Calvert Smallmid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wells Fargo position performs unexpectedly, Calvert Smallmid 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 Calvert Smallmid will offset losses from the drop in Calvert Smallmid's long position.

The idea behind Wells Fargo Global and Calvert Smallmid Cap A 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.

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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.