Correlation Between Nationwide and Nationwide Mid

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

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

Diversification Opportunities for Nationwide and Nationwide Mid

-0.7

Correlation Coefficient

Nationwide  Nationwide Mid

Excellent diversification

The 3 months correlation between Nationwide and Nationwide is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Nationwide E Plus and Nationwide Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Mid Cap and Nationwide 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 E Plus are associated (or correlated) with Nationwide Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Mid Cap has no effect on the direction of Nationwide i.e., Nationwide and Nationwide Mid go up and down completely randomly.

Pair Corralation between Nationwide and Nationwide Mid

Assuming the 90 days horizon Nationwide E Plus is expected to under-perform the Nationwide Mid. But the mutual fund apears to be less risky and, when comparing its historical volatility, Nationwide E Plus is 3.08 times less risky than Nationwide Mid. The mutual fund trades about -0.08 of its potential returns per unit of risk. The Nationwide Mid Cap is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  1,749  in Nationwide Mid Cap on September 3, 2024 and sell it today you would earn a total of  211.00  from holding Nationwide Mid Cap or generate 12.06% return on investment over 90 days.

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

Nationwide E Plus  vs.  Nationwide Mid Cap

Nationwide E Plus

Risk-Adjusted Performance

0 of 100

Very Weak

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

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.

Pair Trading with Nationwide and Nationwide Mid

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

The idea behind Nationwide E Plus and Nationwide Mid 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.