Correlation Between Nationwide Global and Pro Blend

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Can any of the company-specific risk be diversified away by investing in both Nationwide Global and Pro Blend 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 Pro Blend 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 Pro Blend Extended Term, you can compare the effects of market volatilities on Nationwide Global and Pro Blend 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 Pro Blend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nationwide Global and Pro Blend.

Diversification Opportunities for Nationwide Global and Pro Blend

0.66
  Correlation Coefficient

Poor diversification

The 3 months correlation between Nationwide and Pro is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Nationwide Global Equity and Pro Blend Extended Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pro Blend Extended 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 Pro Blend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pro Blend Extended has no effect on the direction of Nationwide Global i.e., Nationwide Global and Pro Blend go up and down completely randomly.

Pair Corralation between Nationwide Global and Pro Blend

Assuming the 90 days horizon Nationwide Global Equity is expected to generate 1.79 times more return on investment than Pro Blend. However, Nationwide Global is 1.79 times more volatile than Pro Blend Extended Term. It trades about 0.08 of its potential returns per unit of risk. Pro Blend Extended Term is currently generating about 0.12 per unit of risk. If you would invest  2,024  in Nationwide Global Equity on September 12, 2024 and sell it today you would earn a total of  436.00  from holding Nationwide Global Equity or generate 21.54% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Nationwide Global Equity  vs.  Pro Blend Extended Term

 Performance 
       Timeline  
Nationwide Global Equity 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Nationwide Global Equity are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Nationwide Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Pro Blend Extended 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Pro Blend Extended Term are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Pro Blend is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Nationwide Global and Pro Blend Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Nationwide Global and Pro Blend

The main advantage of trading using opposite Nationwide Global and Pro Blend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nationwide Global position performs unexpectedly, Pro Blend 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 Pro Blend will offset losses from the drop in Pro Blend's long position.
The idea behind Nationwide Global Equity and Pro Blend Extended Term 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.
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.

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