Correlation Between California Bond and Nationwide Fund
Can any of the company-specific risk be diversified away by investing in both California Bond and Nationwide Fund 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 California Bond and Nationwide Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between California Bond Fund and Nationwide Fund Institutional, you can compare the effects of market volatilities on California Bond and Nationwide Fund 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 California Bond with a short position of Nationwide Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of California Bond and Nationwide Fund.
Diversification Opportunities for California Bond and Nationwide Fund
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between California and NATIONWIDE is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding California Bond Fund and Nationwide Fund Institutional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Fund Inst and California Bond 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 California Bond Fund are associated (or correlated) with Nationwide Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Fund Inst has no effect on the direction of California Bond i.e., California Bond and Nationwide Fund go up and down completely randomly.
Pair Corralation between California Bond and Nationwide Fund
Assuming the 90 days horizon California Bond Fund is expected to under-perform the Nationwide Fund. But the mutual fund apears to be less risky and, when comparing its historical volatility, California Bond Fund is 4.48 times less risky than Nationwide Fund. The mutual fund trades about -0.02 of its potential returns per unit of risk. The Nationwide Fund Institutional is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 3,207 in Nationwide Fund Institutional on November 2, 2024 and sell it today you would lose (29.00) from holding Nationwide Fund Institutional or give up 0.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.04% |
| Values | Daily Returns |
California Bond Fund vs. Nationwide Fund Institutional
Performance |
| Timeline |
| California Bond |
| Nationwide Fund Inst |
California Bond and Nationwide Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with California Bond and Nationwide Fund
The main advantage of trading using opposite California Bond and Nationwide Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California Bond position performs unexpectedly, Nationwide Fund 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 Fund will offset losses from the drop in Nationwide Fund's long position.| California Bond vs. Pace Municipal Fixed | California Bond vs. Aig Government Money | California Bond vs. Morningstar Municipal Bond | California Bond vs. Intermediate Term Tax Free Bond |
| Nationwide Fund vs. Versatile Bond Portfolio | Nationwide Fund vs. Bbh Intermediate Municipal | Nationwide Fund vs. Pace Municipal Fixed | Nationwide Fund vs. Ab Bond Inflation |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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