Correlation Between Nationwide Core and Transamerica Financial
Can any of the company-specific risk be diversified away by investing in both Nationwide Core and Transamerica Financial 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 Core and Transamerica Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nationwide E Plus and Transamerica Financial Life, you can compare the effects of market volatilities on Nationwide Core and Transamerica Financial 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 Core with a short position of Transamerica Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nationwide Core and Transamerica Financial.
Diversification Opportunities for Nationwide Core and Transamerica Financial
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nationwide and Transamerica is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Nationwide E Plus and Transamerica Financial Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Financial and Nationwide Core 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 E Plus are associated (or correlated) with Transamerica Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Financial has no effect on the direction of Nationwide Core i.e., Nationwide Core and Transamerica Financial go up and down completely randomly.
Pair Corralation between Nationwide Core and Transamerica Financial
Assuming the 90 days horizon Nationwide E Plus is expected to generate 0.13 times more return on investment than Transamerica Financial. However, Nationwide E Plus is 7.68 times less risky than Transamerica Financial. It trades about -0.54 of its potential returns per unit of risk. Transamerica Financial Life is currently generating about -0.32 per unit of risk. If you would invest 890.00 in Nationwide E Plus on October 9, 2024 and sell it today you would lose (26.00) from holding Nationwide E Plus or give up 2.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nationwide E Plus vs. Transamerica Financial Life
Performance |
| Timeline |
| Nationwide E Plus |
| Transamerica Financial |
Nationwide Core and Transamerica Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nationwide Core and Transamerica Financial
The main advantage of trading using opposite Nationwide Core and Transamerica Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nationwide Core position performs unexpectedly, Transamerica Financial 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 Transamerica Financial will offset losses from the drop in Transamerica Financial's long position.| Nationwide Core vs. Mesirow Financial Small | Nationwide Core vs. Blackstone Secured Lending | Nationwide Core vs. Financials Ultrasector Profund | Nationwide Core vs. Goldman Sachs Financial |
| Transamerica Financial vs. Virtus High Yield | Transamerica Financial vs. Ab High Income | Transamerica Financial vs. Barings High Yield | Transamerica Financial vs. Dunham High Yield |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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