Correlation Between Nationwide Building and PureTech Health
Can any of the company-specific risk be diversified away by investing in both Nationwide Building and PureTech 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 PureTech 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 PureTech Health plc, you can compare the effects of market volatilities on Nationwide Building and PureTech 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 PureTech Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nationwide Building and PureTech Health.
Diversification Opportunities for Nationwide Building and PureTech Health
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Nationwide and PureTech is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Nationwide Building Society and PureTech Health plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PureTech 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 PureTech Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PureTech Health plc has no effect on the direction of Nationwide Building i.e., Nationwide Building and PureTech Health go up and down completely randomly.
Pair Corralation between Nationwide Building and PureTech Health
Assuming the 90 days trading horizon Nationwide Building Society is expected to generate 0.31 times more return on investment than PureTech Health. However, Nationwide Building Society is 3.21 times less risky than PureTech Health. It trades about 0.0 of its potential returns per unit of risk. PureTech Health plc is currently generating about -0.04 per unit of risk. If you would invest 13,100 in Nationwide Building Society on October 28, 2024 and sell it today you would lose (100.00) from holding Nationwide Building Society or give up 0.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nationwide Building Society vs. PureTech Health plc
Performance |
| Timeline |
| Nationwide Building |
| PureTech Health plc |
Nationwide Building and PureTech Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nationwide Building and PureTech Health
The main advantage of trading using opposite Nationwide Building and PureTech Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nationwide Building position performs unexpectedly, PureTech 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 PureTech Health will offset losses from the drop in PureTech Health's long position.| Nationwide Building vs. Solstad Offshore ASA | Nationwide Building vs. Omega Healthcare Investors | Nationwide Building vs. Electronic Arts | Nationwide Building vs. LPKF Laser Electronics |
| PureTech Health vs. Elmos Semiconductor SE | PureTech Health vs. Foresight Environmental Infrastructure | PureTech Health vs. Seche Environnement SA | PureTech Health vs. Medical Properties Trust |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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