Correlation Between Firsthand Alternative and Nationwide Growth

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

By analyzing existing cross correlation between Firsthand Alternative Energy and Nationwide Growth Fund, you can compare the effects of market volatilities on Firsthand Alternative and Nationwide Growth 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 Firsthand Alternative with a short position of Nationwide Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Firsthand Alternative and Nationwide Growth.

Diversification Opportunities for Firsthand Alternative and Nationwide Growth

0.2

Correlation Coefficient

Firsthand Alternative  Nationwide Growth

Modest diversification

The 3 months correlation between Firsthand and Nationwide is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Firsthand Alternative Energy and Nationwide Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Growth and Firsthand Alternative 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 Firsthand Alternative Energy are associated (or correlated) with Nationwide Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Growth has no effect on the direction of Firsthand Alternative i.e., Firsthand Alternative and Nationwide Growth go up and down completely randomly.

Pair Corralation between Firsthand Alternative and Nationwide Growth

Assuming the 90 days horizon Firsthand Alternative Energy is expected to under-perform the Nationwide Growth. In addition to that, Firsthand Alternative is 2.13 times more volatile than Nationwide Growth Fund. It trades about -0.16 of its total potential returns per unit of risk. Nationwide Growth Fund is currently generating about 0.06 per unit of volatility. If you would invest  1,628  in Nationwide Growth Fund on December 2, 2024 and sell it today you would earn a total of  29.00  from holding Nationwide Growth Fund or generate 1.78% return on investment over 90 days.

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

Firsthand Alternative Energy  vs.  Nationwide Growth Fund

Firsthand Alternative

Risk-Adjusted Performance

Very Weak

Over the last 90 days Firsthand Alternative Energy has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Nationwide Growth

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Firsthand Alternative and Nationwide Growth

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

The idea behind Firsthand Alternative Energy and Nationwide Growth Fund 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..