Correlation Between Blackrock and Nationwide

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

By analyzing existing cross correlation between Blackrock Sp 500 and Nationwide Sp 500, you can compare the effects of market volatilities on Blackrock and Nationwide 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 Blackrock with a short position of Nationwide. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock and Nationwide.

Diversification Opportunities for Blackrock and Nationwide

0.91

Correlation Coefficient

Blackrock  Nationwide

Almost no diversification

The 3 months correlation between Blackrock and Nationwide is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Sp 500 and Nationwide Sp 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Sp 500 and Blackrock 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 Blackrock Sp 500 are associated (or correlated) with Nationwide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Sp 500 has no effect on the direction of Blackrock i.e., Blackrock and Nationwide go up and down completely randomly.

Pair Corralation between Blackrock and Nationwide

Assuming the 90 days horizon Blackrock Sp 500 is expected to generate 0.96 times more return on investment than Nationwide. However, Blackrock Sp 500 is 1.04 times less risky than Nationwide. It trades about 0.07 of its potential returns per unit of risk. Nationwide Sp 500 is currently generating about 0.04 per unit of risk. If you would invest  67,739  in Blackrock Sp 500 on October 23, 2024 and sell it today you would earn a total of  2,415  from holding Blackrock Sp 500 or generate 3.57% return on investment over 90 days.

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

Blackrock Sp 500  vs.  Nationwide Sp 500

Blackrock Sp 500

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Sp 500 are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Blackrock is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Nationwide Sp 500

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nationwide Sp 500 are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Nationwide is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Blackrock and Nationwide

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

The idea behind Blackrock Sp 500 and Nationwide Sp 500 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.