Correlation Between Nationwide Highmark and Virtus High
Can any of the company-specific risk be diversified away by investing in both Nationwide Highmark and Virtus High 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 Highmark and Virtus High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nationwide Highmark Short and Virtus High Yield, you can compare the effects of market volatilities on Nationwide Highmark and Virtus High 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 Highmark with a short position of Virtus High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nationwide Highmark and Virtus High.
Diversification Opportunities for Nationwide Highmark and Virtus High
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nationwide and Virtus is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Nationwide Highmark Short and Virtus High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus High Yield and Nationwide Highmark 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 Highmark Short are associated (or correlated) with Virtus High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus High Yield has no effect on the direction of Nationwide Highmark i.e., Nationwide Highmark and Virtus High go up and down completely randomly.
Pair Corralation between Nationwide Highmark and Virtus High
Assuming the 90 days horizon Nationwide Highmark is expected to generate 1.65 times less return on investment than Virtus High. But when comparing it to its historical volatility, Nationwide Highmark Short is 2.04 times less risky than Virtus High. It trades about 0.18 of its potential returns per unit of risk. Virtus High Yield is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 327.00 in Virtus High Yield on September 2, 2024 and sell it today you would earn a total of 55.00 from holding Virtus High Yield or generate 16.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nationwide Highmark Short vs. Virtus High Yield
Performance |
| Timeline |
| Nationwide Highmark Short |
| Virtus High Yield |
Nationwide Highmark and Virtus High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nationwide Highmark and Virtus High
The main advantage of trading using opposite Nationwide Highmark and Virtus High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nationwide Highmark position performs unexpectedly, Virtus High 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 Virtus High will offset losses from the drop in Virtus High's long position.The idea behind Nationwide Highmark Short and Virtus High Yield 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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