Correlation Between Nationwide Bond and Ep Emerging
Can any of the company-specific risk be diversified away by investing in both Nationwide Bond and Ep Emerging 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 Bond and Ep Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nationwide Bond Index and Ep Emerging Markets, you can compare the effects of market volatilities on Nationwide Bond and Ep Emerging 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 Bond with a short position of Ep Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nationwide Bond and Ep Emerging.
Diversification Opportunities for Nationwide Bond and Ep Emerging
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Nationwide and EPEIX is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Nationwide Bond Index and Ep Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ep Emerging Markets and Nationwide Bond 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 Bond Index are associated (or correlated) with Ep Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ep Emerging Markets has no effect on the direction of Nationwide Bond i.e., Nationwide Bond and Ep Emerging go up and down completely randomly.
Pair Corralation between Nationwide Bond and Ep Emerging
Assuming the 90 days horizon Nationwide Bond Index is expected to generate 0.44 times more return on investment than Ep Emerging. However, Nationwide Bond Index is 2.27 times less risky than Ep Emerging. It trades about 0.1 of its potential returns per unit of risk. Ep Emerging Markets is currently generating about -0.21 per unit of risk. If you would invest 956.00 in Nationwide Bond Index on September 4, 2024 and sell it today you would earn a total of 7.00 from holding Nationwide Bond Index or generate 0.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Nationwide Bond Index vs. Ep Emerging Markets
Performance |
| Timeline |
| Nationwide Bond Index |
| Ep Emerging Markets |
Nationwide Bond and Ep Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nationwide Bond and Ep Emerging
The main advantage of trading using opposite Nationwide Bond and Ep Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nationwide Bond position performs unexpectedly, Ep Emerging 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 Ep Emerging will offset losses from the drop in Ep Emerging's long position.The idea behind Nationwide Bond Index and Ep Emerging Markets 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.
| Ep Emerging vs. Ep Emerging Markets | Ep Emerging vs. Europac International Bond | Ep Emerging vs. Europac International Dividend | Ep Emerging vs. Europac International Dividend |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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