Correlation Between Commonwealth Real and Nationwide Global

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Can any of the company-specific risk be diversified away by investing in both Commonwealth Real and Nationwide Global 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 Commonwealth Real and Nationwide Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commonwealth Real Estate and Nationwide Global Equity, you can compare the effects of market volatilities on Commonwealth Real and Nationwide Global 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 Commonwealth Real with a short position of Nationwide Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commonwealth Real and Nationwide Global.

Diversification Opportunities for Commonwealth Real and Nationwide Global

0.77
  Correlation Coefficient

Poor diversification

The 3 months correlation between Commonwealth and Nationwide is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Commonwealth Real Estate and Nationwide Global Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Global Equity and Commonwealth Real 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 Commonwealth Real Estate are associated (or correlated) with Nationwide Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Global Equity has no effect on the direction of Commonwealth Real i.e., Commonwealth Real and Nationwide Global go up and down completely randomly.

Pair Corralation between Commonwealth Real and Nationwide Global

Assuming the 90 days horizon Commonwealth Real Estate is expected to generate 1.15 times more return on investment than Nationwide Global. However, Commonwealth Real is 1.15 times more volatile than Nationwide Global Equity. It trades about 0.04 of its potential returns per unit of risk. Nationwide Global Equity is currently generating about 0.04 per unit of risk. If you would invest  1,944  in Commonwealth Real Estate on October 5, 2024 and sell it today you would earn a total of  374.00  from holding Commonwealth Real Estate or generate 19.24% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Commonwealth Real Estate  vs.  Nationwide Global Equity

 Performance 
       Timeline  
Commonwealth Real Estate 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Commonwealth Real Estate has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.
Nationwide Global Equity 

Risk-Adjusted Performance

0 of 100

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

Commonwealth Real and Nationwide Global Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Commonwealth Real and Nationwide Global

The main advantage of trading using opposite Commonwealth Real and Nationwide Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commonwealth Real position performs unexpectedly, Nationwide Global 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 Global will offset losses from the drop in Nationwide Global's long position.
The idea behind Commonwealth Real Estate and Nationwide Global Equity 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.

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