Correlation Between Nationwide Growth and Cref Money
Can any of the company-specific risk be diversified away by investing in both Nationwide Growth and Cref Money 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 Cref Money 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 Cref Money Market, you can compare the effects of market volatilities on Nationwide Growth and Cref Money 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 Cref Money. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nationwide Growth and Cref Money.
Diversification Opportunities for Nationwide Growth and Cref Money
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Nationwide and Cref is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Nationwide Growth Fund and Cref Money Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cref Money Market 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 Cref Money. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cref Money Market has no effect on the direction of Nationwide Growth i.e., Nationwide Growth and Cref Money go up and down completely randomly.
Pair Corralation between Nationwide Growth and Cref Money
Assuming the 90 days horizon Nationwide Growth Fund is expected to generate 41.36 times more return on investment than Cref Money. However, Nationwide Growth is 41.36 times more volatile than Cref Money Market. It trades about 0.39 of its potential returns per unit of risk. Cref Money Market is currently generating about 0.93 per unit of risk. If you would invest 1,480 in Nationwide Growth Fund on September 4, 2024 and sell it today you would earn a total of 88.00 from holding Nationwide Growth Fund or generate 5.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nationwide Growth Fund vs. Cref Money Market
Performance |
| Timeline |
| Nationwide Growth |
| Cref Money Market |
Nationwide Growth and Cref Money Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nationwide Growth and Cref Money
The main advantage of trading using opposite Nationwide Growth and Cref Money positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nationwide Growth position performs unexpectedly, Cref Money 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 Cref Money will offset losses from the drop in Cref Money's long position.The idea behind Nationwide Growth Fund and Cref Money Market 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.
| Cref Money vs. Us Government Securities | Cref Money vs. Us Government Securities | Cref Money vs. Virtus Seix Government | Cref Money vs. Dreyfus Government Cash |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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