Correlation Between Nationwide Small and Large Cap
Can any of the company-specific risk be diversified away by investing in both Nationwide Small and Large Cap 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 Small and Large Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nationwide Small Cap and Large Cap Growth, you can compare the effects of market volatilities on Nationwide Small and Large Cap 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 Small with a short position of Large Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nationwide Small and Large Cap.
Diversification Opportunities for Nationwide Small and Large Cap
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between NATIONWIDE and Large is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Nationwide Small Cap and Large Cap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Large Cap Growth and Nationwide Small 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 Small Cap are associated (or correlated) with Large Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Large Cap Growth has no effect on the direction of Nationwide Small i.e., Nationwide Small and Large Cap go up and down completely randomly.
Pair Corralation between Nationwide Small and Large Cap
Assuming the 90 days horizon Nationwide Small Cap is expected to generate 1.61 times more return on investment than Large Cap. However, Nationwide Small is 1.61 times more volatile than Large Cap Growth. It trades about 0.21 of its potential returns per unit of risk. Large Cap Growth is currently generating about 0.24 per unit of risk. If you would invest 1,197 in Nationwide Small Cap on August 28, 2024 and sell it today you would earn a total of 87.00 from holding Nationwide Small Cap or generate 7.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nationwide Small Cap vs. Large Cap Growth
Performance |
| Timeline |
| Nationwide Small Cap |
| Large Cap Growth |
Nationwide Small and Large Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nationwide Small and Large Cap
The main advantage of trading using opposite Nationwide Small and Large Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nationwide Small position performs unexpectedly, Large Cap 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 Large Cap will offset losses from the drop in Large Cap's long position.| Nationwide Small vs. Needham Aggressive Growth | Nationwide Small vs. Siit High Yield | Nationwide Small vs. Morningstar Aggressive Growth | Nationwide Small vs. Franklin High Income |
| Large Cap vs. Glenmede International Secured | Large Cap vs. Equity Income Portfolio | Large Cap vs. Woman In Leadership | Large Cap vs. Responsible Esg Equity |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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