Correlation Between Prudential Core and Nationwide Loomis

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

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

Diversification Opportunities for Prudential Core and Nationwide Loomis

-0.63

Correlation Coefficient

Prudential Core  Nationwide Loomis

Excellent diversification

The 3 months correlation between Prudential and Nationwide is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Core Conservative 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 Prudential Core 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 Prudential Core Conservative 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 Prudential Core i.e., Prudential Core and Nationwide Loomis go up and down completely randomly.

Pair Corralation between Prudential Core and Nationwide Loomis

Assuming the 90 days horizon Prudential Core Conservative is expected to under-perform the Nationwide Loomis. But the mutual fund apears to be less risky and, when comparing its historical volatility, Prudential Core Conservative is 3.04 times less risky than Nationwide Loomis. The mutual fund trades about -0.1 of its potential returns per unit of risk. The Nationwide Loomis All is currently generating about 0.27 of returns per unit of risk over similar time horizon. 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 Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Prudential Core Conservative  vs.  Nationwide Loomis All

Prudential Core Cons

Risk-Adjusted Performance

0 of 100

Very Weak

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

The main advantage of trading using opposite Prudential Core and Nationwide Loomis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Core 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 Prudential Core Conservative 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.