Correlation Between Strategic Allocation and Nationwide Investor

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

By analyzing existing cross correlation between Strategic Allocation Aggressive and Nationwide Investor Destinations, you can compare the effects of market volatilities on Strategic Allocation and Nationwide Investor 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 Strategic Allocation with a short position of Nationwide Investor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strategic Allocation and Nationwide Investor.

Diversification Opportunities for Strategic Allocation and Nationwide Investor

0.98

Correlation Coefficient

Strategic Allocation  Nationwide Investor

Almost no diversification

The 3 months correlation between Strategic and Nationwide is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Strategic Allocation Aggressiv and Nationwide Investor Destinatio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Investor and Strategic Allocation 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 Strategic Allocation Aggressive are associated (or correlated) with Nationwide Investor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Investor has no effect on the direction of Strategic Allocation i.e., Strategic Allocation and Nationwide Investor go up and down completely randomly.

Pair Corralation between Strategic Allocation and Nationwide Investor

Assuming the 90 days horizon Strategic Allocation Aggressive is expected to generate 1.27 times more return on investment than Nationwide Investor. However, Strategic Allocation is 1.27 times more volatile than Nationwide Investor Destinations. It trades about 0.08 of its potential returns per unit of risk. Nationwide Investor Destinations is currently generating about 0.1 per unit of risk. If you would invest  674.00  in Strategic Allocation Aggressive on September 12, 2024 and sell it today you would earn a total of  199.00  from holding Strategic Allocation Aggressive or generate 29.53% return on investment over 90 days.

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

Strategic Allocation Aggressiv  vs.  Nationwide Investor Destinatio

Strategic Allocation

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Strategic Allocation Aggressive are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Strategic Allocation is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Nationwide Investor

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nationwide Investor Destinations are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Nationwide Investor is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Strategic Allocation and Nationwide Investor

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

The idea behind Strategic Allocation Aggressive and Nationwide Investor Destinations 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.