Correlation Between Europac Gold and Nationwide Mid

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

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

Diversification Opportunities for Europac Gold and Nationwide Mid

-0.45

Correlation Coefficient

Europac Gold  Nationwide Mid

Very good diversification

The 3 months correlation between Europac and Nationwide is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Europac Gold Fund 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 Europac Gold 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 Europac Gold Fund 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 Europac Gold i.e., Europac Gold and Nationwide Mid go up and down completely randomly.

Pair Corralation between Europac Gold and Nationwide Mid

Assuming the 90 days horizon Europac Gold Fund is expected to under-perform the Nationwide Mid. In addition to that, Europac Gold is 2.05 times more volatile than Nationwide Mid Cap. It trades about -0.04 of its total potential returns per unit of risk. Nationwide Mid Cap is currently generating about 0.13 per unit of volatility. If you would invest  1,775  in Nationwide Mid Cap on September 15, 2024 and sell it today you would earn a total of  136.00  from holding Nationwide Mid Cap or generate 7.66% return on investment over 90 days.

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

Europac Gold Fund  vs.  Nationwide Mid Cap

Europac Gold

Risk-Adjusted Performance

0 of 100

Very Weak

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

Nationwide Mid Cap

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nationwide Mid Cap are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Nationwide Mid may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Europac Gold and Nationwide Mid

The main advantage of trading using opposite Europac Gold and Nationwide Mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Europac Gold 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 Europac Gold Fund 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.

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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.