Correlation Between Fidelity Sai and Wells Fargo

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

By analyzing existing cross correlation between Fidelity Sai Short Term and Wells Fargo Government, you can compare the effects of market volatilities on Fidelity Sai 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 Fidelity Sai with a short position of Wells Fargo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Sai and Wells Fargo.

Diversification Opportunities for Fidelity Sai and Wells Fargo

0.84

Correlation Coefficient

Fidelity Sai  Wells Fargo

Very poor diversification

The 3 months correlation between Fidelity and Wells is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Sai Short Term and Wells Fargo Government in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wells Fargo Government and Fidelity Sai 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 Fidelity Sai Short Term 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 Government has no effect on the direction of Fidelity Sai i.e., Fidelity Sai and Wells Fargo go up and down completely randomly.

Pair Corralation between Fidelity Sai and Wells Fargo

Assuming the 90 days horizon Fidelity Sai Short Term is expected to generate 0.33 times more return on investment than Wells Fargo. However, Fidelity Sai Short Term is 3.01 times less risky than Wells Fargo. It trades about -0.12 of its potential returns per unit of risk. Wells Fargo Government is currently generating about -0.21 per unit of risk. If you would invest  975.00  in Fidelity Sai Short Term on September 30, 2024 and sell it today you would lose (8.00) from holding Fidelity Sai Short Term or give up 0.82% of portfolio value over 90 days.

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

Fidelity Sai Short Term  vs.  Wells Fargo Government

Fidelity Sai Short

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity Sai Short Term has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong primary indicators, Fidelity Sai is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Wells Fargo Government

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Fidelity Sai and Wells Fargo

The main advantage of trading using opposite Fidelity Sai and Wells Fargo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Sai 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.

The idea behind Fidelity Sai Short Term and Wells Fargo Government 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.