Correlation Between Nationwide Destination and Nationwide Amundi
Can any of the company-specific risk be diversified away by investing in both Nationwide Destination and Nationwide Amundi 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 Destination and Nationwide Amundi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nationwide Destination 2055 and Nationwide Amundi Strategic, you can compare the effects of market volatilities on Nationwide Destination and Nationwide Amundi 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 Destination with a short position of Nationwide Amundi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nationwide Destination and Nationwide Amundi.
Diversification Opportunities for Nationwide Destination and Nationwide Amundi
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Nationwide and Nationwide is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Nationwide Destination 2055 and Nationwide Amundi Strategic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Amundi and Nationwide Destination 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 Destination 2055 are associated (or correlated) with Nationwide Amundi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Amundi has no effect on the direction of Nationwide Destination i.e., Nationwide Destination and Nationwide Amundi go up and down completely randomly.
Pair Corralation between Nationwide Destination and Nationwide Amundi
Assuming the 90 days horizon Nationwide Destination 2055 is expected to generate 8.66 times more return on investment than Nationwide Amundi. However, Nationwide Destination is 8.66 times more volatile than Nationwide Amundi Strategic. It trades about 0.08 of its potential returns per unit of risk. Nationwide Amundi Strategic is currently generating about 0.43 per unit of risk. If you would invest 1,559 in Nationwide Destination 2055 on September 12, 2024 and sell it today you would earn a total of 12.00 from holding Nationwide Destination 2055 or generate 0.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nationwide Destination 2055 vs. Nationwide Amundi Strategic
Performance |
| Timeline |
| Nationwide Destination |
| Nationwide Amundi |
Nationwide Destination and Nationwide Amundi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nationwide Destination and Nationwide Amundi
The main advantage of trading using opposite Nationwide Destination and Nationwide Amundi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nationwide Destination position performs unexpectedly, Nationwide Amundi 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 Nationwide Amundi will offset losses from the drop in Nationwide Amundi's long position.The idea behind Nationwide Destination 2055 and Nationwide Amundi Strategic 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.
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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