Correlation Between Small Cap and Nationwide Small
Can any of the company-specific risk be diversified away by investing in both Small Cap and Nationwide Small 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 Small Cap and Nationwide Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Cap Value and Nationwide Small Cap, you can compare the effects of market volatilities on Small Cap and Nationwide Small 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 Small Cap with a short position of Nationwide Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and Nationwide Small.
Diversification Opportunities for Small Cap and Nationwide Small
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Small and Nationwide is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Value and Nationwide Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Small Cap and Small Cap 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 Small Cap Value are associated (or correlated) with Nationwide Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Small Cap has no effect on the direction of Small Cap i.e., Small Cap and Nationwide Small go up and down completely randomly.
Pair Corralation between Small Cap and Nationwide Small
Assuming the 90 days horizon Small Cap is expected to generate 1.2 times less return on investment than Nationwide Small. But when comparing it to its historical volatility, Small Cap Value is 1.09 times less risky than Nationwide Small. It trades about 0.07 of its potential returns per unit of risk. Nationwide Small Cap is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,093 in Nationwide Small Cap on September 1, 2024 and sell it today you would earn a total of 206.00 from holding Nationwide Small Cap or generate 18.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.47% |
| Values | Daily Returns |
Small Cap Value vs. Nationwide Small Cap
Performance |
| Timeline |
| Small Cap Value |
| Nationwide Small Cap |
Small Cap and Nationwide Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Cap and Nationwide Small
The main advantage of trading using opposite Small Cap and Nationwide Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Cap position performs unexpectedly, Nationwide Small 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 Small will offset losses from the drop in Nationwide Small's long position.| Small Cap vs. Artisan Thematic Fund | Small Cap vs. T Rowe Price | Small Cap vs. Semiconductor Ultrasector Profund | Small Cap vs. Volumetric Fund Volumetric |
| Nationwide Small vs. Nationwide Highmark Small | Nationwide Small vs. Nationwide Highmark Small | Nationwide Small vs. Janus Venture Fund | Nationwide Small vs. The Hartford Midcap |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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