Correlation Between Nationwide Inflation-protec and Inflation-protected
Can any of the company-specific risk be diversified away by investing in both Nationwide Inflation-protec and Inflation-protected 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 Inflation-protec and Inflation-protected into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nationwide Inflation Protected Securities and Inflation Protected Bond Fund, you can compare the effects of market volatilities on Nationwide Inflation-protec and Inflation-protected 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 Inflation-protec with a short position of Inflation-protected. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nationwide Inflation-protec and Inflation-protected.
Diversification Opportunities for Nationwide Inflation-protec and Inflation-protected
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nationwide and Inflation-protected is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Nationwide Inflation Protected and Inflation Protected Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inflation Protected and Nationwide Inflation-protec 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 Inflation Protected Securities are associated (or correlated) with Inflation-protected. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inflation Protected has no effect on the direction of Nationwide Inflation-protec i.e., Nationwide Inflation-protec and Inflation-protected go up and down completely randomly.
Pair Corralation between Nationwide Inflation-protec and Inflation-protected
Assuming the 90 days horizon Nationwide Inflation Protected Securities is expected to generate 0.49 times more return on investment than Inflation-protected. However, Nationwide Inflation Protected Securities is 2.02 times less risky than Inflation-protected. It trades about -0.15 of its potential returns per unit of risk. Inflation Protected Bond Fund is currently generating about -0.11 per unit of risk. If you would invest 901.00 in Nationwide Inflation Protected Securities on October 17, 2024 and sell it today you would lose (20.00) from holding Nationwide Inflation Protected Securities or give up 2.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nationwide Inflation Protected vs. Inflation Protected Bond Fund
Performance |
| Timeline |
| Nationwide Inflation-protec |
| Inflation Protected |
Nationwide Inflation-protec and Inflation-protected Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nationwide Inflation-protec and Inflation-protected
The main advantage of trading using opposite Nationwide Inflation-protec and Inflation-protected positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nationwide Inflation-protec position performs unexpectedly, Inflation-protected 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 Inflation-protected will offset losses from the drop in Inflation-protected's long position.The idea behind Nationwide Inflation Protected Securities and Inflation Protected Bond Fund 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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