Correlation Between Old Westbury and Nationwide Global

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

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

Diversification Opportunities for Old Westbury and Nationwide Global

0.18

Correlation Coefficient

Old Westbury  Nationwide Global

Average diversification

The 3 months correlation between Old and Nationwide is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Old Westbury Municipal and Nationwide Global Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Global Equity and Old Westbury 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 Old Westbury Municipal are associated (or correlated) with Nationwide Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Global Equity has no effect on the direction of Old Westbury i.e., Old Westbury and Nationwide Global go up and down completely randomly.

Pair Corralation between Old Westbury and Nationwide Global

Assuming the 90 days horizon Old Westbury is expected to generate 1.52 times less return on investment than Nationwide Global. But when comparing it to its historical volatility, Old Westbury Municipal is 7.24 times less risky than Nationwide Global. It trades about 0.58 of its potential returns per unit of risk. Nationwide Global Equity is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  2,444  in Nationwide Global Equity on September 13, 2024 and sell it today you would earn a total of  41.00  from holding Nationwide Global Equity or generate 1.68% return on investment over 90 days.

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

Old Westbury Municipal  vs.  Nationwide Global Equity

Old Westbury Municipal

Risk-Adjusted Performance

0 of 100

Weak

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

Nationwide Global Equity

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nationwide Global Equity are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Nationwide Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Old Westbury and Nationwide Global

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

The idea behind Old Westbury Municipal and Nationwide Global Equity 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.