Correlation Between Nationwide Growth and Growth Allocation
Can any of the company-specific risk be diversified away by investing in both Nationwide Growth and Growth Allocation 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 Growth Allocation 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 Growth Allocation Fund, you can compare the effects of market volatilities on Nationwide Growth and Growth Allocation 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 Growth Allocation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nationwide Growth and Growth Allocation.
Diversification Opportunities for Nationwide Growth and Growth Allocation
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between NATIONWIDE and Growth is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Nationwide Growth Fund and Growth Allocation Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Allocation 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 Growth Allocation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Allocation has no effect on the direction of Nationwide Growth i.e., Nationwide Growth and Growth Allocation go up and down completely randomly.
Pair Corralation between Nationwide Growth and Growth Allocation
Assuming the 90 days horizon Nationwide Growth Fund is expected to generate 1.33 times more return on investment than Growth Allocation. However, Nationwide Growth is 1.33 times more volatile than Growth Allocation Fund. It trades about 0.12 of its potential returns per unit of risk. Growth Allocation Fund is currently generating about 0.1 per unit of risk. If you would invest 1,256 in Nationwide Growth Fund on September 4, 2024 and sell it today you would earn a total of 489.00 from holding Nationwide Growth Fund or generate 38.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nationwide Growth Fund vs. Growth Allocation Fund
Performance |
| Timeline |
| Nationwide Growth |
| Growth Allocation |
Nationwide Growth and Growth Allocation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nationwide Growth and Growth Allocation
The main advantage of trading using opposite Nationwide Growth and Growth Allocation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nationwide Growth position performs unexpectedly, Growth Allocation 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 Growth Allocation will offset losses from the drop in Growth Allocation's long position.The idea behind Nationwide Growth Fund and Growth Allocation Fund 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.
| Growth Allocation vs. Defensive Market Strategies | Growth Allocation vs. Defensive Market Strategies | Growth Allocation vs. Value Equity Institutional | Growth Allocation vs. Value Equity Investor |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |