Correlation Between Nationwide Destination and Nationwide Highmark
Can any of the company-specific risk be diversified away by investing in both Nationwide Destination and Nationwide Highmark 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 Highmark 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 Highmark Bond, you can compare the effects of market volatilities on Nationwide Destination and Nationwide Highmark 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 Highmark. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nationwide Destination and Nationwide Highmark.
Diversification Opportunities for Nationwide Destination and Nationwide Highmark
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Nationwide and Nationwide is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Nationwide Destination 2055 and Nationwide Highmark Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Highmark Bond 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 Highmark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Highmark Bond has no effect on the direction of Nationwide Destination i.e., Nationwide Destination and Nationwide Highmark go up and down completely randomly.
Pair Corralation between Nationwide Destination and Nationwide Highmark
Assuming the 90 days horizon Nationwide Destination 2055 is expected to generate 2.25 times more return on investment than Nationwide Highmark. However, Nationwide Destination is 2.25 times more volatile than Nationwide Highmark Bond. It trades about 0.1 of its potential returns per unit of risk. Nationwide Highmark Bond is currently generating about 0.09 per unit of risk. If you would invest 1,443 in Nationwide Destination 2055 on September 1, 2024 and sell it today you would earn a total of 140.00 from holding Nationwide Destination 2055 or generate 9.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nationwide Destination 2055 vs. Nationwide Highmark Bond
Performance |
| Timeline |
| Nationwide Destination |
| Nationwide Highmark Bond |
Nationwide Destination and Nationwide Highmark Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nationwide Destination and Nationwide Highmark
The main advantage of trading using opposite Nationwide Destination and Nationwide Highmark positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nationwide Destination position performs unexpectedly, Nationwide Highmark 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 Highmark will offset losses from the drop in Nationwide Highmark's long position.| Nationwide Destination vs. Goldman Sachs Emerging | Nationwide Destination vs. Angel Oak Multi Strategy | Nationwide Destination vs. Investec Emerging Markets | Nationwide Destination vs. Growth Strategy Fund |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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