Correlation Between American Funds and Nationwide Destination
Can any of the company-specific risk be diversified away by investing in both American Funds and Nationwide Destination 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 American Funds and Nationwide Destination into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds 2065 and Nationwide Destination 2065, you can compare the effects of market volatilities on American Funds and Nationwide Destination 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 Nationwide Destination. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Nationwide Destination.
Diversification Opportunities for American Funds and Nationwide Destination
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Nationwide is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding American Funds 2065 and Nationwide Destination 2065 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Destination 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 2065 are associated (or correlated) with Nationwide Destination. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Destination has no effect on the direction of American Funds i.e., American Funds and Nationwide Destination go up and down completely randomly.
Pair Corralation between American Funds and Nationwide Destination
Assuming the 90 days horizon American Funds is expected to generate 1.0 times less return on investment than Nationwide Destination. In addition to that, American Funds is 1.01 times more volatile than Nationwide Destination 2065. It trades about 0.1 of its total potential returns per unit of risk. Nationwide Destination 2065 is currently generating about 0.1 per unit of volatility. If you would invest 1,291 in Nationwide Destination 2065 on September 1, 2024 and sell it today you would earn a total of 127.00 from holding Nationwide Destination 2065 or generate 9.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds 2065 vs. Nationwide Destination 2065
Performance |
| Timeline |
| American Funds 2065 |
| Nationwide Destination |
American Funds and Nationwide Destination Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Nationwide Destination
The main advantage of trading using opposite American Funds and Nationwide Destination positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Nationwide Destination 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 Destination will offset losses from the drop in Nationwide Destination's long position.| American Funds vs. Income Fund Of | American Funds vs. New World Fund | American Funds vs. American Mutual Fund | American Funds vs. American Mutual Fund |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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