Correlation Between Sp Midcap and Nationwide Geneva

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

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

Diversification Opportunities for Sp Midcap and Nationwide Geneva

0.41

Correlation Coefficient

Sp Midcap  Nationwide Geneva

Very weak diversification

The 3 months correlation between SPMIX and Nationwide is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Sp Midcap Index and Nationwide Geneva Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Geneva Mid and Sp Midcap 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 Sp Midcap Index are associated (or correlated) with Nationwide Geneva. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Geneva Mid has no effect on the direction of Sp Midcap i.e., Sp Midcap and Nationwide Geneva go up and down completely randomly.

Pair Corralation between Sp Midcap and Nationwide Geneva

Assuming the 90 days horizon Sp Midcap Index is expected to under-perform the Nationwide Geneva. In addition to that, Sp Midcap is 2.79 times more volatile than Nationwide Geneva Mid. It trades about -0.15 of its total potential returns per unit of risk. Nationwide Geneva Mid is currently generating about 0.12 per unit of volatility. If you would invest  1,364  in Nationwide Geneva Mid on September 16, 2024 and sell it today you would earn a total of  24.00  from holding Nationwide Geneva Mid or generate 1.76% return on investment over 90 days.

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

Sp Midcap Index  vs.  Nationwide Geneva Mid

Sp Midcap Index

Risk-Adjusted Performance

0 of 100

Very Weak

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

Nationwide Geneva Mid

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nationwide Geneva Mid are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Nationwide Geneva may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Sp Midcap and Nationwide Geneva

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

The idea behind Sp Midcap Index and Nationwide Geneva Mid 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.