Correlation Between Siit High and Nationwide Small
Can any of the company-specific risk be diversified away by investing in both Siit High and Nationwide Small 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 Siit High and Nationwide Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Siit High Yield and Nationwide Small Cap, you can compare the effects of market volatilities on Siit High and Nationwide Small 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 Siit High with a short position of Nationwide Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Siit High and Nationwide Small.
Diversification Opportunities for Siit High and Nationwide Small
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Siit and NATIONWIDE is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Siit High Yield and Nationwide Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Small Cap and Siit High 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 Siit High Yield are associated (or correlated) with Nationwide Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Small Cap has no effect on the direction of Siit High i.e., Siit High and Nationwide Small go up and down completely randomly.
Pair Corralation between Siit High and Nationwide Small
Assuming the 90 days horizon Siit High is expected to generate 13.57 times less return on investment than Nationwide Small. But when comparing it to its historical volatility, Siit High Yield is 9.16 times less risky than Nationwide Small. It trades about 0.14 of its potential returns per unit of risk. Nationwide Small Cap is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 1,197 in Nationwide Small Cap on August 28, 2024 and sell it today you would earn a total of 87.00 from holding Nationwide Small Cap or generate 7.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Siit High Yield vs. Nationwide Small Cap
Performance |
| Timeline |
| Siit High Yield |
| Nationwide Small Cap |
Siit High and Nationwide Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Siit High and Nationwide Small
The main advantage of trading using opposite Siit High and Nationwide Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Siit High position performs unexpectedly, Nationwide Small 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 Small will offset losses from the drop in Nationwide Small's long position.| Siit High vs. Artisan High Income | Siit High vs. Sit Emerging Markets | Siit High vs. Sit International Equity | Siit High vs. Stet Intermediate Term |
| Nationwide Small vs. Needham Aggressive Growth | Nationwide Small vs. Siit High Yield | Nationwide Small vs. Morningstar Aggressive Growth | Nationwide Small vs. Franklin High Income |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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