Correlation Between Nationwide Growth and Nationwide Core

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Can any of the company-specific risk be diversified away by investing in both Nationwide Growth and Nationwide Core 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 Growth and Nationwide Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nationwide Growth Fund and Nationwide E Plus, you can compare the effects of market volatilities on Nationwide Growth and Nationwide Core 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 Growth with a short position of Nationwide Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nationwide Growth and Nationwide Core.

Diversification Opportunities for Nationwide Growth and Nationwide Core

-0.69
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Nationwide and Nationwide is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Nationwide Growth Fund and Nationwide E Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide E Plus and Nationwide Growth 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 Growth Fund are associated (or correlated) with Nationwide Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide E Plus has no effect on the direction of Nationwide Growth i.e., Nationwide Growth and Nationwide Core go up and down completely randomly.

Pair Corralation between Nationwide Growth and Nationwide Core

Assuming the 90 days horizon Nationwide Growth Fund is expected to generate 2.4 times more return on investment than Nationwide Core. However, Nationwide Growth is 2.4 times more volatile than Nationwide E Plus. It trades about 0.16 of its potential returns per unit of risk. Nationwide E Plus is currently generating about 0.05 per unit of risk. If you would invest  1,434  in Nationwide Growth Fund on August 30, 2024 and sell it today you would earn a total of  41.00  from holding Nationwide Growth Fund or generate 2.86% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Nationwide Growth Fund  vs.  Nationwide E Plus

 Performance 
       Timeline  
Nationwide Growth 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Nationwide Growth Fund are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Nationwide Growth is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Nationwide E Plus 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Nationwide E Plus has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Nationwide Core is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Nationwide Growth and Nationwide Core Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Nationwide Growth and Nationwide Core

The main advantage of trading using opposite Nationwide Growth and Nationwide Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nationwide Growth position performs unexpectedly, Nationwide Core 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 Core will offset losses from the drop in Nationwide Core's long position.
The idea behind Nationwide Growth Fund and Nationwide E Plus 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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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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