Correlation Between Pace International and Nationwide International
Can any of the company-specific risk be diversified away by investing in both Pace International and Nationwide International 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 Pace International and Nationwide International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pace International Emerging and Nationwide International Index, you can compare the effects of market volatilities on Pace International and Nationwide International 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 Pace International with a short position of Nationwide International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pace International and Nationwide International.
Diversification Opportunities for Pace International and Nationwide International
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Pace and Nationwide is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Pace International Emerging and Nationwide International Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide International and Pace International 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 Pace International Emerging are associated (or correlated) with Nationwide International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide International has no effect on the direction of Pace International i.e., Pace International and Nationwide International go up and down completely randomly.
Pair Corralation between Pace International and Nationwide International
Assuming the 90 days horizon Pace International Emerging is expected to under-perform the Nationwide International. But the mutual fund apears to be less risky and, when comparing its historical volatility, Pace International Emerging is 1.0 times less risky than Nationwide International. The mutual fund trades about -0.24 of its potential returns per unit of risk. The Nationwide International Index is currently generating about -0.2 of returns per unit of risk over similar time horizon. If you would invest 913.00 in Nationwide International Index on August 30, 2024 and sell it today you would lose (32.00) from holding Nationwide International Index or give up 3.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pace International Emerging vs. Nationwide International Index
Performance |
| Timeline |
| Pace International |
| Nationwide International |
Pace International and Nationwide International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pace International and Nationwide International
The main advantage of trading using opposite Pace International and Nationwide International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pace International position performs unexpectedly, Nationwide International 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 International will offset losses from the drop in Nationwide International's long position.| Pace International vs. Virtus High Yield | Pace International vs. Lord Abbett High | Pace International vs. Artisan High Income | Pace International vs. American Century High |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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