Correlation Between Nationwide Building and Pharol SGPS
Can any of the company-specific risk be diversified away by investing in both Nationwide Building and Pharol SGPS 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 Building and Pharol SGPS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nationwide Building Society and Pharol SGPS SA, you can compare the effects of market volatilities on Nationwide Building and Pharol SGPS 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 Building with a short position of Pharol SGPS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nationwide Building and Pharol SGPS.
Diversification Opportunities for Nationwide Building and Pharol SGPS
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nationwide and Pharol is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Nationwide Building Society and Pharol SGPS SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pharol SGPS SA and Nationwide Building 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 Building Society are associated (or correlated) with Pharol SGPS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pharol SGPS SA has no effect on the direction of Nationwide Building i.e., Nationwide Building and Pharol SGPS go up and down completely randomly.
Pair Corralation between Nationwide Building and Pharol SGPS
Assuming the 90 days trading horizon Nationwide Building Society is expected to generate 0.17 times more return on investment than Pharol SGPS. However, Nationwide Building Society is 6.06 times less risky than Pharol SGPS. It trades about 0.12 of its potential returns per unit of risk. Pharol SGPS SA is currently generating about 0.01 per unit of risk. If you would invest 11,800 in Nationwide Building Society on August 27, 2024 and sell it today you would earn a total of 1,400 from holding Nationwide Building Society or generate 11.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Nationwide Building Society vs. Pharol SGPS SA
Performance |
| Timeline |
| Nationwide Building |
| Pharol SGPS SA |
Nationwide Building and Pharol SGPS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nationwide Building and Pharol SGPS
The main advantage of trading using opposite Nationwide Building and Pharol SGPS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nationwide Building position performs unexpectedly, Pharol SGPS 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 Pharol SGPS will offset losses from the drop in Pharol SGPS's long position.| Nationwide Building vs. Albion Technology General | Nationwide Building vs. Pfeiffer Vacuum Technology | Nationwide Building vs. DXC Technology Co | Nationwide Building vs. Gaztransport et Technigaz |
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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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