Correlation Between American Funds and NESTLE NIGERIA
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By analyzing existing cross correlation between American Funds Fundamental and NESTLE NIGERIA PLC, you can compare the effects of market volatilities on American Funds and NESTLE NIGERIA 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 American Funds with a short position of NESTLE NIGERIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and NESTLE NIGERIA.
Diversification Opportunities for American Funds and NESTLE NIGERIA
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and NESTLE is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Fundamental and NESTLE NIGERIA PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NESTLE NIGERIA PLC and American Funds 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 American Funds Fundamental are associated (or correlated) with NESTLE NIGERIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NESTLE NIGERIA PLC has no effect on the direction of American Funds i.e., American Funds and NESTLE NIGERIA go up and down completely randomly.
Pair Corralation between American Funds and NESTLE NIGERIA
Assuming the 90 days horizon American Funds is expected to generate 1.97 times less return on investment than NESTLE NIGERIA. But when comparing it to its historical volatility, American Funds Fundamental is 2.01 times less risky than NESTLE NIGERIA. It trades about 0.2 of its potential returns per unit of risk. NESTLE NIGERIA PLC is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 87,500 in NESTLE NIGERIA PLC on November 3, 2024 and sell it today you would earn a total of 7,500 from holding NESTLE NIGERIA PLC or generate 8.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 91.3% |
| Values | Daily Returns |
American Funds Fundamental vs. NESTLE NIGERIA PLC
Performance |
| Timeline |
| American Funds Funda |
| NESTLE NIGERIA PLC |
American Funds and NESTLE NIGERIA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and NESTLE NIGERIA
The main advantage of trading using opposite American Funds and NESTLE NIGERIA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, NESTLE NIGERIA 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 NESTLE NIGERIA will offset losses from the drop in NESTLE NIGERIA's long position.| American Funds vs. World Energy Fund | American Funds vs. Energy Services Fund | American Funds vs. Alpsalerian Energy Infrastructure | American Funds vs. Icon Natural Resources |
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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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