Correlation Between Ab Global and Nationwide Mid

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

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

Diversification Opportunities for Ab Global and Nationwide Mid

0.62

Correlation Coefficient

Ab Global  Nationwide Mid

Poor diversification

The 3 months correlation between CBSYX and Nationwide is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Ab Global Risk and Nationwide Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Mid Cap and Ab Global 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 Ab Global Risk are associated (or correlated) with Nationwide Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Mid Cap has no effect on the direction of Ab Global i.e., Ab Global and Nationwide Mid go up and down completely randomly.

Pair Corralation between Ab Global and Nationwide Mid

Assuming the 90 days horizon Ab Global Risk is expected to under-perform the Nationwide Mid. But the mutual fund apears to be less risky and, when comparing its historical volatility, Ab Global Risk is 1.42 times less risky than Nationwide Mid. The mutual fund trades about -0.01 of its potential returns per unit of risk. The Nationwide Mid Cap is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,550  in Nationwide Mid Cap on October 4, 2024 and sell it today you would earn a total of  91.00  from holding Nationwide Mid Cap or generate 5.87% return on investment over 90 days.

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

Ab Global Risk  vs.  Nationwide Mid Cap

Ab Global Risk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ab Global Risk 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 basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Nationwide Mid Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nationwide Mid Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Ab Global and Nationwide Mid

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

The idea behind Ab Global Risk and Nationwide Mid Cap 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.

Check out your portfolio center.

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 Anywhere module to track or share privately all of your investments from the convenience of any device.