Correlation Between UBS Group and Wells Fargo

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Can any of the company-specific risk be diversified away by investing in both UBS Group 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 UBS Group and Wells Fargo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UBS Group Ag and Wells Fargo, you can compare the effects of market volatilities on UBS Group 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 UBS Group with a short position of Wells Fargo. Check out your portfolio center. Please also check ongoing floating volatility patterns of UBS Group and Wells Fargo.

Diversification Opportunities for UBS Group and Wells Fargo

0.42
  Correlation Coefficient

Very weak diversification

The 3 months correlation between UBS Group and Wells is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding UBS Group Ag and Wells Fargo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wells Fargo and UBS Group 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 UBS Group Ag 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 has no effect on the direction of UBS Group i.e., UBS Group and Wells Fargo go up and down completely randomly.

Pair Corralation between UBS Group and Wells Fargo

Considering the 90-day investment horizon UBS Group Ag is expected to generate 1.02 times more return on investment than Wells Fargo. However, UBS Group is 1.02 times more volatile than Wells Fargo. It trades about 0.0 of its potential returns per unit of risk. Wells Fargo is currently generating about -0.01 per unit of risk. If you would invest  1,614  in UBS Group Ag on June 26, 2022 and sell it today you would lose (123.00)  from holding UBS Group Ag or give up 7.62% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

UBS Group Ag  vs.  Wells Fargo

 Performance (%) 
       Timeline  
UBS Group Ag 
UBS Group Performance
0 of 100
Over the last 90 days UBS Group Ag has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's fundamental drivers remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

UBS Group Price Channel

Wells Fargo 
Wells Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Wells Fargo are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and 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.

Wells Price Channel

UBS Group and Wells Fargo Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with UBS Group and Wells Fargo

The main advantage of trading using opposite UBS Group and Wells Fargo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UBS Group 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.
UBS Group vs. China Construction B
The idea behind UBS Group Ag and Wells Fargo 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.
Wells Fargo vs. China Construction B
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.

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