Correlation Between Cb Large and Nationwide Growth

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

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

Diversification Opportunities for Cb Large and Nationwide Growth

0.87

Correlation Coefficient

Cb Large  Nationwide Growth

Very poor diversification

The 3 months correlation between CBLSX and Nationwide is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Cb Large Cap and Nationwide Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Growth and Cb Large 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 Cb Large Cap are associated (or correlated) with Nationwide Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Growth has no effect on the direction of Cb Large i.e., Cb Large and Nationwide Growth go up and down completely randomly.

Pair Corralation between Cb Large and Nationwide Growth

Assuming the 90 days horizon Cb Large is expected to generate 2.14 times less return on investment than Nationwide Growth. But when comparing it to its historical volatility, Cb Large Cap is 1.15 times less risky than Nationwide Growth. It trades about 0.09 of its potential returns per unit of risk. Nationwide Growth Fund is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  1,388  in Nationwide Growth Fund on September 12, 2024 and sell it today you would earn a total of  101.00  from holding Nationwide Growth Fund or generate 7.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Cb Large Cap  vs.  Nationwide Growth Fund

Cb Large Cap

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cb Large Cap are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Cb Large is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Nationwide Growth

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nationwide Growth Fund are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Nationwide Growth may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Cb Large and Nationwide Growth

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

The idea behind Cb Large Cap and Nationwide Growth Fund 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.