Correlation Between Nationwide Growth and Rational Defensive
Can any of the company-specific risk be diversified away by investing in both Nationwide Growth and Rational Defensive 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 Rational Defensive 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 Rational Defensive Growth, you can compare the effects of market volatilities on Nationwide Growth and Rational Defensive 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 Rational Defensive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nationwide Growth and Rational Defensive.
Diversification Opportunities for Nationwide Growth and Rational Defensive
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between NATIONWIDE and Rational is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Nationwide Growth Fund and Rational Defensive Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rational Defensive Growth 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 Rational Defensive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rational Defensive Growth has no effect on the direction of Nationwide Growth i.e., Nationwide Growth and Rational Defensive go up and down completely randomly.
Pair Corralation between Nationwide Growth and Rational Defensive
Assuming the 90 days horizon Nationwide Growth is expected to generate 1.28 times less return on investment than Rational Defensive. But when comparing it to its historical volatility, Nationwide Growth Fund is 1.25 times less risky than Rational Defensive. It trades about 0.13 of its potential returns per unit of risk. Rational Defensive Growth is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 3,443 in Rational Defensive Growth on September 2, 2024 and sell it today you would earn a total of 599.00 from holding Rational Defensive Growth or generate 17.4% 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. Rational Defensive Growth
Performance |
| Timeline |
| Nationwide Growth |
| Rational Defensive Growth |
Nationwide Growth and Rational Defensive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nationwide Growth and Rational Defensive
The main advantage of trading using opposite Nationwide Growth and Rational Defensive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nationwide Growth position performs unexpectedly, Rational Defensive 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 Rational Defensive will offset losses from the drop in Rational Defensive's long position.| Nationwide Growth vs. Nationwide Mid Cap | Nationwide Growth vs. Nationwide Small Cap | Nationwide Growth vs. Nationwide International Index | Nationwide Growth vs. Nationwide Fund Institutional |
| Rational Defensive vs. Tax Managed Large Cap | Rational Defensive vs. Transamerica Large Cap | Rational Defensive vs. Fidelity Series 1000 | Rational Defensive vs. Fundamental Large 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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