Correlation Between Nationwide Global and Eagle Mid
Can any of the company-specific risk be diversified away by investing in both Nationwide Global and Eagle Mid 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 Nationwide Global and Eagle Mid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nationwide Global Equity and Eagle Mid Cap, you can compare the effects of market volatilities on Nationwide Global and Eagle Mid 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 Nationwide Global with a short position of Eagle Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nationwide Global and Eagle Mid.
Diversification Opportunities for Nationwide Global and Eagle Mid
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NATIONWIDE and Eagle is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Nationwide Global Equity and Eagle Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Mid Cap and Nationwide Global 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 Nationwide Global Equity are associated (or correlated) with Eagle Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Mid Cap has no effect on the direction of Nationwide Global i.e., Nationwide Global and Eagle Mid go up and down completely randomly.
Pair Corralation between Nationwide Global and Eagle Mid
Assuming the 90 days horizon Nationwide Global Equity is expected to generate 0.66 times more return on investment than Eagle Mid. However, Nationwide Global Equity is 1.51 times less risky than Eagle Mid. It trades about 0.09 of its potential returns per unit of risk. Eagle Mid Cap is currently generating about 0.05 per unit of risk. If you would invest 2,110 in Nationwide Global Equity on September 4, 2024 and sell it today you would earn a total of 373.00 from holding Nationwide Global Equity or generate 17.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Nationwide Global Equity vs. Eagle Mid Cap
Performance |
| Timeline |
| Nationwide Global Equity |
| Eagle Mid Cap |
Nationwide Global and Eagle Mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nationwide Global and Eagle Mid
The main advantage of trading using opposite Nationwide Global and Eagle Mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nationwide Global position performs unexpectedly, Eagle Mid 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 Eagle Mid will offset losses from the drop in Eagle Mid's long position.The idea behind Nationwide Global Equity and Eagle Mid Cap 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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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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