Correlation Between Nationwide Building and Systemair
Can any of the company-specific risk be diversified away by investing in both Nationwide Building and Systemair 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 Systemair 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 Systemair AB, you can compare the effects of market volatilities on Nationwide Building and Systemair 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 Systemair. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nationwide Building and Systemair.
Diversification Opportunities for Nationwide Building and Systemair
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nationwide and Systemair is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Nationwide Building Society and Systemair AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Systemair AB 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 Systemair. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Systemair AB has no effect on the direction of Nationwide Building i.e., Nationwide Building and Systemair go up and down completely randomly.
Pair Corralation between Nationwide Building and Systemair
Assuming the 90 days trading horizon Nationwide Building is expected to generate 1.06 times less return on investment than Systemair. But when comparing it to its historical volatility, Nationwide Building Society is 3.97 times less risky than Systemair. It trades about 0.07 of its potential returns per unit of risk. Systemair AB is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 8,592 in Systemair AB on August 27, 2024 and sell it today you would earn a total of 488.00 from holding Systemair AB or generate 5.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.74% |
| Values | Daily Returns |
Nationwide Building Society vs. Systemair AB
Performance |
| Timeline |
| Nationwide Building |
| Systemair AB |
Nationwide Building and Systemair Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nationwide Building and Systemair
The main advantage of trading using opposite Nationwide Building and Systemair positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nationwide Building position performs unexpectedly, Systemair 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 Systemair will offset losses from the drop in Systemair's long position.| Nationwide Building vs. Wheaton Precious Metals | Nationwide Building vs. Cornish Metals | Nationwide Building vs. Ecclesiastical Insurance Office | Nationwide Building vs. Zurich Insurance Group |
| Systemair vs. Hochschild Mining plc | Systemair vs. Spirent Communications plc | Systemair vs. AMG Advanced Metallurgical | Systemair vs. Cornish Metals |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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