Correlation Between Wells Fargo and Small Pany

Can any of the company-specific risk be diversified away by investing in both Wells Fargo and Small Pany 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 Small Pany 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 Small Pany Value, you can compare the effects of market volatilities on Wells Fargo and Small Pany 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 Small Pany. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wells Fargo and Small Pany.

Diversification Opportunities for Wells Fargo and Small Pany

-0.45

Correlation Coefficient

Wells Fargo  Small Pany

Very good diversification

The 3 months correlation between Wells and Small is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Wells Fargo Advantage and Small Pany Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Pany Value 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 Small Pany. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Pany Value has no effect on the direction of Wells Fargo i.e., Wells Fargo and Small Pany go up and down completely randomly.

Pair Corralation between Wells Fargo and Small Pany

Assuming the 90 days horizon Wells Fargo Advantage is expected to under-perform the Small Pany. But the mutual fund apears to be less risky and, when comparing its historical volatility, Wells Fargo Advantage is 4.79 times less risky than Small Pany. The mutual fund trades about -0.04 of its potential returns per unit of risk. The Small Pany Value is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  3,422  in Small Pany Value on May 28, 2025 and sell it today you would earn a total of  286.00  from holding Small Pany Value or generate 8.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Wells Fargo Advantage  vs.  Small Pany Value

Wells Fargo Advantage

Risk-Adjusted Performance

Weakest

Over the last 90 days Wells Fargo Advantage has generated negative risk-adjusted returns adding no value to fund investors. 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.

Small Pany Value

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Small Pany Value are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Small Pany may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Wells Fargo and Small Pany

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

The idea behind Wells Fargo Advantage and Small Pany Value 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.