Correlation Between Global Gold and Nationwide International
Can any of the company-specific risk be diversified away by investing in both Global Gold and Nationwide International 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 Global Gold and Nationwide International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Gold Fund and Nationwide International Index, you can compare the effects of market volatilities on Global Gold and Nationwide International 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 Global Gold with a short position of Nationwide International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Gold and Nationwide International.
Diversification Opportunities for Global Gold and Nationwide International
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Global and Nationwide is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Global Gold Fund and Nationwide International Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide International and Global Gold 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 Global Gold Fund are associated (or correlated) with Nationwide International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide International has no effect on the direction of Global Gold i.e., Global Gold and Nationwide International go up and down completely randomly.
Pair Corralation between Global Gold and Nationwide International
Assuming the 90 days horizon Global Gold Fund is expected to under-perform the Nationwide International. In addition to that, Global Gold is 2.44 times more volatile than Nationwide International Index. It trades about -0.26 of its total potential returns per unit of risk. Nationwide International Index is currently generating about -0.17 per unit of volatility. If you would invest 919.00 in Nationwide International Index on August 30, 2024 and sell it today you would lose (28.00) from holding Nationwide International Index or give up 3.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Gold Fund vs. Nationwide International Index
Performance |
| Timeline |
| Global Gold Fund |
| Nationwide International |
Global Gold and Nationwide International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Gold and Nationwide International
The main advantage of trading using opposite Global Gold and Nationwide International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Gold position performs unexpectedly, Nationwide International 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 International will offset losses from the drop in Nationwide International's long position.| Global Gold vs. First Eagle Gold | Global Gold vs. Aquagold International | Global Gold vs. Morningstar Unconstrained Allocation | Global Gold vs. Thrivent High Yield |
| Nationwide International vs. Artisan Small Cap | Nationwide International vs. Rational Defensive Growth | Nationwide International vs. L Abbett Growth | Nationwide International vs. Touchstone 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 CEOs Directory module to screen CEOs from public companies around the world.
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