Correlation Between Wells Fargo and Large Cap

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

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

Diversification Opportunities for Wells Fargo and Large Cap

0.75

Correlation Coefficient

Wells Fargo  Large Cap

Poor diversification

The 3 months correlation between Wells and Large is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Wells Fargo Mon and Large Cap Growth Profund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Large Cap Growth 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 Mon are associated (or correlated) with Large Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Large Cap Growth has no effect on the direction of Wells Fargo i.e., Wells Fargo and Large Cap go up and down completely randomly.

Pair Corralation between Wells Fargo and Large Cap

Assuming the 90 days horizon Wells Fargo is expected to generate 12.54 times less return on investment than Large Cap. In addition to that, Wells Fargo is 1.12 times more volatile than Large Cap Growth Profund. It trades about 0.02 of its total potential returns per unit of risk. Large Cap Growth Profund is currently generating about 0.25 per unit of volatility. If you would invest  4,493  in Large Cap Growth Profund on May 10, 2025 and sell it today you would earn a total of  573.00  from holding Large Cap Growth Profund or generate 12.75% return on investment over 90 days.

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

Wells Fargo Mon  vs.  Large Cap Growth Profund

Wells Fargo Mon

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Wells Fargo Mon are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Wells Fargo is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Large Cap Growth

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Large Cap Growth Profund are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Large Cap may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Wells Fargo and Large Cap

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

The idea behind Wells Fargo Mon and Large Cap Growth Profund 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.