Correlation Between Applied Finance and Nationwide
Can any of the company-specific risk be diversified away by investing in both Applied Finance and Nationwide 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 Applied Finance and Nationwide into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Finance Explorer and Nationwide E Plus, you can compare the effects of market volatilities on Applied Finance and Nationwide 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 Applied Finance with a short position of Nationwide. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Finance and Nationwide.
Diversification Opportunities for Applied Finance and Nationwide
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Applied and Nationwide is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Applied Finance Explorer and Nationwide E Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide E Plus and Applied Finance 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 Applied Finance Explorer are associated (or correlated) with Nationwide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide E Plus has no effect on the direction of Applied Finance i.e., Applied Finance and Nationwide go up and down completely randomly.
Pair Corralation between Applied Finance and Nationwide
Assuming the 90 days horizon Applied Finance Explorer is expected to under-perform the Nationwide. In addition to that, Applied Finance is 1.83 times more volatile than Nationwide E Plus. It trades about -0.17 of its total potential returns per unit of risk. Nationwide E Plus is currently generating about -0.18 per unit of volatility. If you would invest 896.00 in Nationwide E Plus on September 12, 2024 and sell it today you would lose (16.00) from holding Nationwide E Plus or give up 1.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Applied Finance Explorer vs. Nationwide E Plus
Performance |
| Timeline |
| Applied Finance Explorer |
| Nationwide E Plus |
Applied Finance and Nationwide Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Finance and Nationwide
The main advantage of trading using opposite Applied Finance and Nationwide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Finance position performs unexpectedly, Nationwide 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 Nationwide will offset losses from the drop in Nationwide's long position.| Applied Finance vs. Thrivent Small Cap | Applied Finance vs. Applied Finance Select | Applied Finance vs. Parnassus Endeavor Fund | Applied Finance vs. Queens Road Small |
| Nationwide vs. Queens Road Small | Nationwide vs. Applied Finance Explorer | Nationwide vs. Victory Rs Partners | Nationwide vs. Lsv Small Cap |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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