Correlation Between Nationwide Bond and Nationwide Highmark
Can any of the company-specific risk be diversified away by investing in both Nationwide Bond and Nationwide Highmark 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 Bond and Nationwide Highmark into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nationwide Bond Fund and Nationwide Highmark Small, you can compare the effects of market volatilities on Nationwide Bond and Nationwide Highmark 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 Bond with a short position of Nationwide Highmark. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nationwide Bond and Nationwide Highmark.
Diversification Opportunities for Nationwide Bond and Nationwide Highmark
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nationwide and Nationwide is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Nationwide Bond Fund and Nationwide Highmark Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Highmark Small and Nationwide Bond 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 Bond Fund are associated (or correlated) with Nationwide Highmark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Highmark Small has no effect on the direction of Nationwide Bond i.e., Nationwide Bond and Nationwide Highmark go up and down completely randomly.
Pair Corralation between Nationwide Bond and Nationwide Highmark
Assuming the 90 days horizon Nationwide Bond is expected to generate 12.97 times less return on investment than Nationwide Highmark. But when comparing it to its historical volatility, Nationwide Bond Fund is 3.41 times less risky than Nationwide Highmark. It trades about 0.05 of its potential returns per unit of risk. Nationwide Highmark Small is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 3,418 in Nationwide Highmark Small on August 28, 2024 and sell it today you would earn a total of 167.00 from holding Nationwide Highmark Small or generate 4.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nationwide Bond Fund vs. Nationwide Highmark Small
Performance |
| Timeline |
| Nationwide Bond |
| Nationwide Highmark Small |
Nationwide Bond and Nationwide Highmark Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nationwide Bond and Nationwide Highmark
The main advantage of trading using opposite Nationwide Bond and Nationwide Highmark positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nationwide Bond position performs unexpectedly, Nationwide Highmark 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 Highmark will offset losses from the drop in Nationwide Highmark's long position.The idea behind Nationwide Bond Fund and Nationwide Highmark Small 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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