Correlation Between Profunds-large Cap and Nationwide Small
Can any of the company-specific risk be diversified away by investing in both Profunds-large 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 Profunds-large 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 Profunds Large Cap Growth and Nationwide Small Cap, you can compare the effects of market volatilities on Profunds-large 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 Profunds-large Cap with a short position of Nationwide Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Profunds-large Cap and Nationwide Small.
Diversification Opportunities for Profunds-large Cap and Nationwide Small
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Profunds-large and NATIONWIDE is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Profunds Large Cap Growth 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 Profunds-large 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 Profunds Large Cap Growth 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 Profunds-large Cap i.e., Profunds-large Cap and Nationwide Small go up and down completely randomly.
Pair Corralation between Profunds-large Cap and Nationwide Small
Assuming the 90 days horizon Profunds Large Cap Growth is expected to generate 0.79 times more return on investment than Nationwide Small. However, Profunds Large Cap Growth is 1.26 times less risky than Nationwide Small. It trades about 0.08 of its potential returns per unit of risk. Nationwide Small Cap is currently generating about 0.04 per unit of risk. If you would invest 2,339 in Profunds Large Cap Growth on August 24, 2024 and sell it today you would earn a total of 1,120 from holding Profunds Large Cap Growth or generate 47.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Profunds Large Cap Growth vs. Nationwide Small Cap
Performance |
| Timeline |
| Profunds Large Cap |
| Nationwide Small Cap |
Profunds-large Cap and Nationwide Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Profunds-large Cap and Nationwide Small
The main advantage of trading using opposite Profunds-large Cap and Nationwide Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Profunds-large 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.| Profunds-large Cap vs. Nationwide Small Cap | Profunds-large Cap vs. Baird Smallmid Cap | Profunds-large Cap vs. Artisan Small Cap | Profunds-large Cap vs. Ancorathelen Small Mid Cap |
| Nationwide Small vs. Vanguard Small Cap Index | Nationwide Small vs. Vanguard Small Cap Index | Nationwide Small vs. Vanguard Small Cap Index | Nationwide Small vs. Fidelity Small Cap |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
| Transaction History View history of all your transactions and understand their impact on performance | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |