Correlation Between Nationwide Mid and Nationwide Small

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

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

Diversification Opportunities for Nationwide Mid and Nationwide Small

0.99

Correlation Coefficient

Nationwide Mid  Nationwide Small

No risk reduction

The 3 months correlation between Nationwide and Nationwide is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Nationwide Mid Cap 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 Nationwide Mid 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 Nationwide Mid Cap 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 Nationwide Mid i.e., Nationwide Mid and Nationwide Small go up and down completely randomly.

Pair Corralation between Nationwide Mid and Nationwide Small

Assuming the 90 days horizon Nationwide Mid is expected to generate 1.1 times less return on investment than Nationwide Small. But when comparing it to its historical volatility, Nationwide Mid Cap is 1.33 times less risky than Nationwide Small. It trades about 0.18 of its potential returns per unit of risk. Nationwide Small Cap is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1,130  in Nationwide Small Cap on September 5, 2024 and sell it today you would earn a total of  196.00  from holding Nationwide Small Cap or generate 17.35% return on investment over 90 days.

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

Nationwide Mid Cap  vs.  Nationwide Small Cap

Nationwide Mid Cap

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Nationwide Mid Cap are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Nationwide Mid may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Nationwide Small Cap

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nationwide Small Cap are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Nationwide Small showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nationwide Mid and Nationwide Small

The main advantage of trading using opposite Nationwide Mid and Nationwide Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nationwide Mid 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.

The idea behind Nationwide Mid Cap and Nationwide Small Cap 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.