Correlation Between Microsoft and Nationwide Loomis

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

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

Diversification Opportunities for Microsoft and Nationwide Loomis

0.34

Correlation Coefficient

Microsoft  Nationwide Loomis

Weak diversification

The 3 months correlation between Microsoft and Nationwide is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Nationwide Loomis All in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Loomis All and Microsoft 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 Microsoft are associated (or correlated) with Nationwide Loomis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Loomis All has no effect on the direction of Microsoft i.e., Microsoft and Nationwide Loomis go up and down completely randomly.

Pair Corralation between Microsoft and Nationwide Loomis

Given the investment horizon of 90 days Microsoft is expected to generate 3.38 times less return on investment than Nationwide Loomis. In addition to that, Microsoft is 1.3 times more volatile than Nationwide Loomis All. It trades about 0.06 of its total potential returns per unit of risk. Nationwide Loomis All is currently generating about 0.27 per unit of volatility. If you would invest  1,866  in Nationwide Loomis All on September 13, 2024 and sell it today you would earn a total of  334.00  from holding Nationwide Loomis All or generate 17.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Microsoft  vs.  Nationwide Loomis All

Microsoft

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Microsoft is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Nationwide Loomis All

Risk-Adjusted Performance

21 of 100

Solid

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

Pair Trading with Microsoft and Nationwide Loomis

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

The idea behind Microsoft and Nationwide Loomis All 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.