Correlation Between Old Westbury and Nationwide Destination
Can any of the company-specific risk be diversified away by investing in both Old Westbury 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 Old Westbury and Nationwide Destination into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Old Westbury Large and Nationwide Destination 2055, you can compare the effects of market volatilities on Old Westbury 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 Old Westbury with a short position of Nationwide Destination. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Westbury and Nationwide Destination.
Diversification Opportunities for Old Westbury and Nationwide Destination
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Old and Nationwide is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Old Westbury Large and Nationwide Destination 2055 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Destination and Old Westbury 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 Old Westbury Large 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 Old Westbury i.e., Old Westbury and Nationwide Destination go up and down completely randomly.
Pair Corralation between Old Westbury and Nationwide Destination
Assuming the 90 days horizon Old Westbury Large is expected to generate 1.04 times more return on investment than Nationwide Destination. However, Old Westbury is 1.04 times more volatile than Nationwide Destination 2055. It trades about 0.1 of its potential returns per unit of risk. Nationwide Destination 2055 is currently generating about 0.08 per unit of risk. If you would invest 1,506 in Old Westbury Large on September 3, 2024 and sell it today you would earn a total of 644.00 from holding Old Westbury Large or generate 42.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Old Westbury Large vs. Nationwide Destination 2055
Performance |
| Timeline |
| Old Westbury Large |
| Nationwide Destination |
Old Westbury and Nationwide Destination Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Westbury and Nationwide Destination
The main advantage of trading using opposite Old Westbury and Nationwide Destination positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Westbury 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.| Old Westbury vs. American Funds New | Old Westbury vs. American Funds New | Old Westbury vs. New Perspective Fund | Old Westbury vs. New Perspective Fund |
| Nationwide Destination vs. Inverse Government Long | Nationwide Destination vs. Aig Government Money | Nationwide Destination vs. Us Government Securities | Nationwide Destination vs. Us Government Securities |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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