Correlation Between Volatility Shares and Nationwide

Can any of the company-specific risk be diversified away by investing in both Volatility Shares and Nationwide 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 Volatility Shares and Nationwide into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Volatility Shares Trust and Nationwide, you can compare the effects of market volatilities on Volatility Shares and Nationwide 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 Volatility Shares with a short position of Nationwide. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volatility Shares and Nationwide.

Diversification Opportunities for Volatility Shares and Nationwide

0.82

Correlation Coefficient

Volatility Shares  Nationwide

Very poor diversification

The 3 months correlation between Volatility and Nationwide is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Volatility Shares Trust and Nationwide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide and Volatility Shares 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 Volatility Shares Trust are associated (or correlated) with Nationwide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide has no effect on the direction of Volatility Shares i.e., Volatility Shares and Nationwide go up and down completely randomly.

Pair Corralation between Volatility Shares and Nationwide

If you would invest  5,388  in Volatility Shares Trust on September 18, 2024 and sell it today you would earn a total of  1,667  from holding Volatility Shares Trust or generate 30.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	4.76%
Values	Daily Returns

Volatility Shares Trust  vs.  Nationwide

Volatility Shares Trust

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Volatility Shares Trust are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Volatility Shares showed solid returns over the last few months and may actually be approaching a breakup point.

Nationwide

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nationwide has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward-looking signals, Nationwide is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Volatility Shares and Nationwide

The main advantage of trading using opposite Volatility Shares and Nationwide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volatility Shares position performs unexpectedly, Nationwide 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 will offset losses from the drop in Nationwide's long position.

The idea behind Volatility Shares Trust and Nationwide pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.