Correlation Between Nationwide Fund and Federated

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

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

Diversification Opportunities for Nationwide Fund and Federated

-0.64

Correlation Coefficient

Nationwide Fund  Federated

Excellent diversification

The 3 months correlation between Nationwide and Federated is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Nationwide Fund Institutional and Federated U S in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated U S and Nationwide Fund 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 Fund Institutional are associated (or correlated) with Federated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated U S has no effect on the direction of Nationwide Fund i.e., Nationwide Fund and Federated go up and down completely randomly.

Pair Corralation between Nationwide Fund and Federated

Assuming the 90 days horizon Nationwide Fund Institutional is expected to generate 5.95 times more return on investment than Federated. However, Nationwide Fund is 5.95 times more volatile than Federated U S. It trades about 0.11 of its potential returns per unit of risk. Federated U S is currently generating about 0.13 per unit of risk. If you would invest  2,620  in Nationwide Fund Institutional on September 12, 2024 and sell it today you would earn a total of  869.00  from holding Nationwide Fund Institutional or generate 33.17% return on investment over 90 days.

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

Nationwide Fund Institutional  vs.  Federated U S

Nationwide Fund Inst

Risk-Adjusted Performance

13 of 100

Good

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

Federated U S

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Federated U S has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Federated is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nationwide Fund and Federated

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

The idea behind Nationwide Fund Institutional and Federated U S 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.