Correlation Between Nationwide Mid and Nationwide Geneva

Can any of the company-specific risk be diversified away by investing in both Nationwide Mid and Nationwide Geneva 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 Geneva 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 Geneva Small, you can compare the effects of market volatilities on Nationwide Mid and Nationwide Geneva 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 Geneva. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nationwide Mid and Nationwide Geneva.

Diversification Opportunities for Nationwide Mid and Nationwide Geneva

0.99

Correlation Coefficient

Nationwide Mid  Nationwide Geneva

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 Geneva Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Geneva Small 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 Geneva. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Geneva Small has no effect on the direction of Nationwide Mid i.e., Nationwide Mid and Nationwide Geneva go up and down completely randomly.

Pair Corralation between Nationwide Mid and Nationwide Geneva

Assuming the 90 days horizon Nationwide Mid is expected to generate 1.08 times less return on investment than Nationwide Geneva. But when comparing it to its historical volatility, Nationwide Mid Cap is 1.25 times less risky than Nationwide Geneva. It trades about 0.19 of its potential returns per unit of risk. Nationwide Geneva Small is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  8,109  in Nationwide Geneva Small on September 3, 2024 and sell it today you would earn a total of  1,048  from holding Nationwide Geneva Small or generate 12.92% 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 Geneva Small

Nationwide Mid Cap

Risk-Adjusted Performance

15 of 100

Good

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 Geneva Small

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nationwide Geneva Small 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 Geneva may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Nationwide Mid and Nationwide Geneva

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

The idea behind Nationwide Mid Cap and Nationwide Geneva Small 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.