Correlation Between Smallcap Growth and Nationwide Growth
Can any of the company-specific risk be diversified away by investing in both Smallcap Growth and Nationwide Growth 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 Smallcap Growth and Nationwide Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smallcap Growth Fund and Nationwide Growth Fund, you can compare the effects of market volatilities on Smallcap Growth and Nationwide Growth 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 Smallcap Growth with a short position of Nationwide Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smallcap Growth and Nationwide Growth.
Diversification Opportunities for Smallcap Growth and Nationwide Growth
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Smallcap and NATIONWIDE is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Smallcap Growth Fund and Nationwide Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Growth and Smallcap Growth 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 Smallcap Growth Fund are associated (or correlated) with Nationwide Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Growth has no effect on the direction of Smallcap Growth i.e., Smallcap Growth and Nationwide Growth go up and down completely randomly.
Pair Corralation between Smallcap Growth and Nationwide Growth
Assuming the 90 days horizon Smallcap Growth Fund is expected to generate 2.03 times more return on investment than Nationwide Growth. However, Smallcap Growth is 2.03 times more volatile than Nationwide Growth Fund. It trades about 0.28 of its potential returns per unit of risk. Nationwide Growth Fund is currently generating about 0.38 per unit of risk. If you would invest 1,593 in Smallcap Growth Fund on September 3, 2024 and sell it today you would earn a total of 136.00 from holding Smallcap Growth Fund or generate 8.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smallcap Growth Fund vs. Nationwide Growth Fund
Performance |
| Timeline |
| Smallcap Growth |
| Nationwide Growth |
Smallcap Growth and Nationwide Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smallcap Growth and Nationwide Growth
The main advantage of trading using opposite Smallcap Growth and Nationwide Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smallcap Growth position performs unexpectedly, Nationwide Growth 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 Growth will offset losses from the drop in Nationwide Growth's long position.| Smallcap Growth vs. Goldman Sachs Real | Smallcap Growth vs. Vanguard Reit Index | Smallcap Growth vs. Deutsche Real Estate | Smallcap Growth vs. Amg Managers Centersquare |
| Nationwide Growth vs. Vanguard Total Stock | Nationwide Growth vs. Vanguard 500 Index | Nationwide Growth vs. Vanguard Total Stock | Nationwide Growth vs. Vanguard Total Stock |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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