Correlation Between Nationwide Destination and Nationwide Core
Can any of the company-specific risk be diversified away by investing in both Nationwide Destination and Nationwide Core 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 Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nationwide Destination 2065 and Nationwide E Plus, you can compare the effects of market volatilities on Nationwide Destination and Nationwide Core 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 Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nationwide Destination and Nationwide Core.
Diversification Opportunities for Nationwide Destination and Nationwide Core
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Nationwide and Nationwide is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Nationwide Destination 2065 and Nationwide E Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide E Plus 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 2065 are associated (or correlated) with Nationwide Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide E Plus has no effect on the direction of Nationwide Destination i.e., Nationwide Destination and Nationwide Core go up and down completely randomly.
Pair Corralation between Nationwide Destination and Nationwide Core
Assuming the 90 days horizon Nationwide Destination 2065 is expected to generate 1.79 times more return on investment than Nationwide Core. However, Nationwide Destination is 1.79 times more volatile than Nationwide E Plus. It trades about 0.35 of its potential returns per unit of risk. Nationwide E Plus is currently generating about 0.08 per unit of risk. If you would invest 1,356 in Nationwide Destination 2065 on September 1, 2024 and sell it today you would earn a total of 64.00 from holding Nationwide Destination 2065 or generate 4.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nationwide Destination 2065 vs. Nationwide E Plus
Performance |
| Timeline |
| Nationwide Destination |
| Nationwide E Plus |
Nationwide Destination and Nationwide Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nationwide Destination and Nationwide Core
The main advantage of trading using opposite Nationwide Destination and Nationwide Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nationwide Destination position performs unexpectedly, Nationwide Core 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 Core will offset losses from the drop in Nationwide Core's long position.The idea behind Nationwide Destination 2065 and Nationwide E Plus 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 Stocks Directory module to find actively traded stocks across global markets.
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