Correlation Between Wells Fargo and Grupo Carso

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

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

Diversification Opportunities for Wells Fargo and Grupo Carso

-0.82

Correlation Coefficient

Wells Fargo  Grupo Carso

Pay attention - limited upside

The 3 months correlation between Wells and Grupo is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Wells Fargo and Grupo Carso SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Carso SAB 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 are associated (or correlated) with Grupo Carso. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Carso SAB has no effect on the direction of Wells Fargo i.e., Wells Fargo and Grupo Carso go up and down completely randomly.

Pair Corralation between Wells Fargo and Grupo Carso

Considering the 90-day investment horizon Wells Fargo is expected to generate 0.63 times more return on investment than Grupo Carso. However, Wells Fargo is 1.59 times less risky than Grupo Carso. It trades about 0.18 of its potential returns per unit of risk. Grupo Carso SAB is currently generating about -0.15 per unit of risk. If you would invest  5,785  in Wells Fargo on January 21, 2024 and sell it today you would earn a total of  250.00  from holding Wells Fargo or generate 4.32% return on investment over 90 days.

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

Wells Fargo  vs.  Grupo Carso SAB

Wells Fargo

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Wells Fargo are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Wells Fargo exhibited solid returns over the last few months and may actually be approaching a breakup point.

Grupo Carso SAB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grupo Carso SAB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Wells Fargo and Grupo Carso

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

The idea behind Wells Fargo and Grupo Carso SAB 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.