Correlation Between Nationwide Growth and State Street
Can any of the company-specific risk be diversified away by investing in both Nationwide Growth and State Street 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 State Street 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 State Street Smallmid, you can compare the effects of market volatilities on Nationwide Growth and State Street 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 State Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nationwide Growth and State Street.
Diversification Opportunities for Nationwide Growth and State Street
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between NATIONWIDE and State is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Nationwide Growth Fund and State Street Smallmid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Street Smallmid 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 State Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Street Smallmid has no effect on the direction of Nationwide Growth i.e., Nationwide Growth and State Street go up and down completely randomly.
Pair Corralation between Nationwide Growth and State Street
Assuming the 90 days horizon Nationwide Growth is expected to generate 1.04 times less return on investment than State Street. But when comparing it to its historical volatility, Nationwide Growth Fund is 1.47 times less risky than State Street. It trades about 0.11 of its potential returns per unit of risk. State Street Smallmid is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 22,133 in State Street Smallmid on September 3, 2024 and sell it today you would earn a total of 10,996 from holding State Street Smallmid or generate 49.68% 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. State Street Smallmid
Performance |
| Timeline |
| Nationwide Growth |
| State Street Smallmid |
Nationwide Growth and State Street Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nationwide Growth and State Street
The main advantage of trading using opposite Nationwide Growth and State Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nationwide Growth position performs unexpectedly, State Street 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 State Street will offset losses from the drop in State Street's long position.| Nationwide Growth vs. Vanguard Total Stock | Nationwide Growth vs. Vanguard 500 Index | Nationwide Growth vs. Vanguard Total Stock | Nationwide Growth vs. Vanguard Total Stock |
| State Street vs. Rational Defensive Growth | State Street vs. Small Pany Growth | State Street vs. Nationwide Growth Fund | State Street vs. Champlain Mid Cap |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
Other Complementary Tools
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine |