Correlation Between Davenport Small and Nationwide Bailard

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

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

Diversification Opportunities for Davenport Small and Nationwide Bailard

0.99

Correlation Coefficient

Davenport Small  Nationwide Bailard

No risk reduction

The 3 months correlation between Davenport and Nationwide is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Davenport Small Cap and Nationwide Bailard Nitive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Bailard Nitive and Davenport Small 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 Davenport Small Cap are associated (or correlated) with Nationwide Bailard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Bailard Nitive has no effect on the direction of Davenport Small i.e., Davenport Small and Nationwide Bailard go up and down completely randomly.

Pair Corralation between Davenport Small and Nationwide Bailard

Assuming the 90 days horizon Davenport Small is expected to generate 1.29 times less return on investment than Nationwide Bailard. But when comparing it to its historical volatility, Davenport Small Cap is 1.17 times less risky than Nationwide Bailard. It trades about 0.05 of its potential returns per unit of risk. Nationwide Bailard Nitive is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,355  in Nationwide Bailard Nitive on September 13, 2024 and sell it today you would earn a total of  479.00  from holding Nationwide Bailard Nitive or generate 35.35% return on investment over 90 days.

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

Davenport Small Cap  vs.  Nationwide Bailard Nitive

Davenport Small Cap

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Davenport Small Cap are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Davenport Small may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Nationwide Bailard Nitive

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nationwide Bailard Nitive are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Nationwide Bailard may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Davenport Small and Nationwide Bailard

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

The idea behind Davenport Small Cap and Nationwide Bailard Nitive 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.

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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.