Correlation Between Nationwide Growth and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Nationwide Growth and Dow Jones 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 Growth and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nationwide Growth Fund and Dow Jones Industrial, you can compare the effects of market volatilities on Nationwide Growth and Dow Jones 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 Growth with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nationwide Growth and Dow Jones.
Diversification Opportunities for Nationwide Growth and Dow Jones
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nationwide and Dow is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Nationwide Growth Fund and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Nationwide Growth 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 Growth Fund are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Nationwide Growth i.e., Nationwide Growth and Dow Jones go up and down completely randomly.
Pair Corralation between Nationwide Growth and Dow Jones
Assuming the 90 days horizon Nationwide Growth Fund is expected to generate 0.91 times more return on investment than Dow Jones. However, Nationwide Growth Fund is 1.1 times less risky than Dow Jones. It trades about -0.14 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about -0.18 per unit of risk. If you would invest 1,664 in Nationwide Growth Fund on December 4, 2024 and sell it today you would lose (34.00) from holding Nationwide Growth Fund or give up 2.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Nationwide Growth Fund vs. Dow Jones Industrial
Performance |
| Timeline |
Nationwide Growth and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Nationwide Growth Fund
Pair trading matchups for Nationwide Growth
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Nationwide Growth and Dow Jones
The main advantage of trading using opposite Nationwide Growth and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nationwide Growth position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Nationwide Growth vs. Angel Oak Financial | Nationwide Growth vs. Financial Industries Fund | Nationwide Growth vs. Financials Ultrasector Profund | Nationwide Growth vs. Gabelli Global Financial |
| Dow Jones vs. Balchem | Dow Jones vs. Merit Medical Systems | Dow Jones vs. American Vanguard | Dow Jones vs. Regeneron Pharmaceuticals |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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