Correlation Between Nationwide Investor and Nationwide Global
Can any of the company-specific risk be diversified away by investing in both Nationwide Investor and Nationwide Global 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 Investor and Nationwide Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nationwide Investor Destinations and Nationwide Global Equity, you can compare the effects of market volatilities on Nationwide Investor and Nationwide Global 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 Investor with a short position of Nationwide Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nationwide Investor and Nationwide Global.
Diversification Opportunities for Nationwide Investor and Nationwide Global
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Nationwide and Nationwide is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Nationwide Investor Destinatio and Nationwide Global Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Global Equity and Nationwide Investor 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 Investor Destinations are associated (or correlated) with Nationwide Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Global Equity has no effect on the direction of Nationwide Investor i.e., Nationwide Investor and Nationwide Global go up and down completely randomly.
Pair Corralation between Nationwide Investor and Nationwide Global
Assuming the 90 days horizon Nationwide Investor Destinations is expected to generate 0.83 times more return on investment than Nationwide Global. However, Nationwide Investor Destinations is 1.21 times less risky than Nationwide Global. It trades about 0.17 of its potential returns per unit of risk. Nationwide Global Equity is currently generating about 0.13 per unit of risk. If you would invest 1,070 in Nationwide Investor Destinations on August 27, 2024 and sell it today you would earn a total of 26.00 from holding Nationwide Investor Destinations or generate 2.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nationwide Investor Destinatio vs. Nationwide Global Equity
Performance |
| Timeline |
| Nationwide Investor |
| Nationwide Global Equity |
Nationwide Investor and Nationwide Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nationwide Investor and Nationwide Global
The main advantage of trading using opposite Nationwide Investor and Nationwide Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nationwide Investor position performs unexpectedly, Nationwide Global 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 Nationwide Global will offset losses from the drop in Nationwide Global's long position.The idea behind Nationwide Investor Destinations and Nationwide Global Equity pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation |