Correlation Between Nationwide Building and XLMedia PLC
Can any of the company-specific risk be diversified away by investing in both Nationwide Building and XLMedia PLC 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 XLMedia PLC 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 XLMedia PLC, you can compare the effects of market volatilities on Nationwide Building and XLMedia PLC 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 XLMedia PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nationwide Building and XLMedia PLC.
Diversification Opportunities for Nationwide Building and XLMedia PLC
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nationwide and XLMedia is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Nationwide Building Society and XLMedia PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XLMedia 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 XLMedia PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XLMedia PLC has no effect on the direction of Nationwide Building i.e., Nationwide Building and XLMedia PLC go up and down completely randomly.
Pair Corralation between Nationwide Building and XLMedia PLC
Assuming the 90 days trading horizon Nationwide Building Society is expected to under-perform the XLMedia PLC. But the stock apears to be less risky and, when comparing its historical volatility, Nationwide Building Society is 12.11 times less risky than XLMedia PLC. The stock trades about -0.23 of its potential returns per unit of risk. The XLMedia PLC is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest 895.00 in XLMedia PLC on October 25, 2024 and sell it today you would earn a total of 150.00 from holding XLMedia PLC or generate 16.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nationwide Building Society vs. XLMedia PLC
Performance |
| Timeline |
| Nationwide Building |
| XLMedia PLC |
Nationwide Building and XLMedia PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nationwide Building and XLMedia PLC
The main advantage of trading using opposite Nationwide Building and XLMedia PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nationwide Building position performs unexpectedly, XLMedia PLC 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 XLMedia PLC will offset losses from the drop in XLMedia PLC's long position.| Nationwide Building vs. DXC Technology Co | Nationwide Building vs. Take Two Interactive Software | Nationwide Building vs. Home Depot | Nationwide Building vs. SMA Solar Technology |
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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