Correlation Between Nationwide Building and Abingdon Health
Can any of the company-specific risk be diversified away by investing in both Nationwide Building and Abingdon Health 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 Abingdon Health 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 Abingdon Health Plc, you can compare the effects of market volatilities on Nationwide Building and Abingdon Health 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 Abingdon Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nationwide Building and Abingdon Health.
Diversification Opportunities for Nationwide Building and Abingdon Health
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nationwide and Abingdon is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Nationwide Building Society and Abingdon Health Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abingdon Health Plc 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 Abingdon Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abingdon Health Plc has no effect on the direction of Nationwide Building i.e., Nationwide Building and Abingdon Health go up and down completely randomly.
Pair Corralation between Nationwide Building and Abingdon Health
Assuming the 90 days trading horizon Nationwide Building Society is expected to generate 0.07 times more return on investment than Abingdon Health. However, Nationwide Building Society is 13.89 times less risky than Abingdon Health. It trades about 0.07 of its potential returns per unit of risk. Abingdon Health Plc is currently generating about -0.09 per unit of risk. If you would invest 13,000 in Nationwide Building Society on September 5, 2024 and sell it today you would earn a total of 200.00 from holding Nationwide Building Society or generate 1.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.22% |
| Values | Daily Returns |
Nationwide Building Society vs. Abingdon Health Plc
Performance |
| Timeline |
| Nationwide Building |
| Abingdon Health Plc |
Nationwide Building and Abingdon Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nationwide Building and Abingdon Health
The main advantage of trading using opposite Nationwide Building and Abingdon Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nationwide Building position performs unexpectedly, Abingdon Health 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 Abingdon Health will offset losses from the drop in Abingdon Health's long position.| Nationwide Building vs. Home Depot | Nationwide Building vs. Weiss Korea Opportunity | Nationwide Building vs. River and Mercantile | Nationwide Building vs. Chrysalis Investments |
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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