Correlation Between Microlise Group and Nationwide Building
Can any of the company-specific risk be diversified away by investing in both Microlise Group and Nationwide Building 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 Microlise Group and Nationwide Building into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microlise Group PLC and Nationwide Building Society, you can compare the effects of market volatilities on Microlise Group and Nationwide Building 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 Microlise Group with a short position of Nationwide Building. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microlise Group and Nationwide Building.
Diversification Opportunities for Microlise Group and Nationwide Building
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Microlise and Nationwide is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Microlise Group PLC and Nationwide Building Society in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Building and Microlise Group 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 Microlise Group PLC are associated (or correlated) with Nationwide Building. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Building has no effect on the direction of Microlise Group i.e., Microlise Group and Nationwide Building go up and down completely randomly.
Pair Corralation between Microlise Group and Nationwide Building
Assuming the 90 days trading horizon Microlise Group PLC is expected to under-perform the Nationwide Building. In addition to that, Microlise Group is 3.71 times more volatile than Nationwide Building Society. It trades about -0.02 of its total potential returns per unit of risk. Nationwide Building Society is currently generating about 0.01 per unit of volatility. If you would invest 12,650 in Nationwide Building Society on September 2, 2024 and sell it today you would earn a total of 550.00 from holding Nationwide Building Society or generate 4.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microlise Group PLC vs. Nationwide Building Society
Performance |
| Timeline |
| Microlise Group PLC |
| Nationwide Building |
Microlise Group and Nationwide Building Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microlise Group and Nationwide Building
The main advantage of trading using opposite Microlise Group and Nationwide Building positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microlise Group position performs unexpectedly, Nationwide Building 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 Building will offset losses from the drop in Nationwide Building's long position.| Microlise Group vs. SupplyMe Capital PLC | Microlise Group vs. Lloyds Banking Group | Microlise Group vs. Premier African Minerals | Microlise Group vs. SANTANDER UK 8 |
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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