Correlation Between Nationwide Core and Nationwide Destination
Can any of the company-specific risk be diversified away by investing in both Nationwide Core and Nationwide Destination 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 Nationwide Destination 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 Nationwide Destination 2035, you can compare the effects of market volatilities on Nationwide Core and Nationwide Destination 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 Nationwide Destination. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nationwide Core and Nationwide Destination.
Diversification Opportunities for Nationwide Core and Nationwide Destination
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nationwide and Nationwide is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Nationwide E Plus and Nationwide Destination 2035 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Destination 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 Nationwide Destination. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Destination has no effect on the direction of Nationwide Core i.e., Nationwide Core and Nationwide Destination go up and down completely randomly.
Pair Corralation between Nationwide Core and Nationwide Destination
Assuming the 90 days horizon Nationwide Core is expected to generate 3.63 times less return on investment than Nationwide Destination. But when comparing it to its historical volatility, Nationwide E Plus is 1.42 times less risky than Nationwide Destination. It trades about 0.04 of its potential returns per unit of risk. Nationwide Destination 2035 is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 795.00 in Nationwide Destination 2035 on August 27, 2024 and sell it today you would earn a total of 232.00 from holding Nationwide Destination 2035 or generate 29.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nationwide E Plus vs. Nationwide Destination 2035
Performance |
| Timeline |
| Nationwide E Plus |
| Nationwide Destination |
Nationwide Core and Nationwide Destination Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nationwide Core and Nationwide Destination
The main advantage of trading using opposite Nationwide Core and Nationwide Destination positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nationwide Core position performs unexpectedly, Nationwide Destination 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 Destination will offset losses from the drop in Nationwide Destination's long position.| Nationwide Core vs. Federated Equity Income | Nationwide Core vs. Small Cap Equity | Nationwide Core vs. Ab Select Equity | Nationwide Core vs. Gmo Global Equity |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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