Correlation Between Gmo Equity and Nationwide Core

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

By analyzing existing cross correlation between Gmo Equity Allocation and Nationwide E Plus, you can compare the effects of market volatilities on Gmo Equity and Nationwide Core 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 Gmo Equity with a short position of Nationwide Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo Equity and Nationwide Core.

Diversification Opportunities for Gmo Equity and Nationwide Core

-0.75

Correlation Coefficient

Gmo Equity  Nationwide Core

Pay attention - limited upside

The 3 months correlation between Gmo and Nationwide is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Gmo Equity Allocation and Nationwide E Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide E Plus and Gmo Equity 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 Gmo Equity Allocation are associated (or correlated) with Nationwide Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide E Plus has no effect on the direction of Gmo Equity i.e., Gmo Equity and Nationwide Core go up and down completely randomly.

Pair Corralation between Gmo Equity and Nationwide Core

Assuming the 90 days horizon Gmo Equity Allocation is expected to generate 2.57 times more return on investment than Nationwide Core. However, Gmo Equity is 2.57 times more volatile than Nationwide E Plus. It trades about 0.17 of its potential returns per unit of risk. Nationwide E Plus is currently generating about -0.09 per unit of risk. If you would invest  1,366  in Gmo Equity Allocation on August 31, 2024 and sell it today you would earn a total of  116.00  from holding Gmo Equity Allocation or generate 8.49% return on investment over 90 days.

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

Gmo Equity Allocation  vs.  Nationwide E Plus

Gmo Equity Allocation

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gmo Equity Allocation are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Gmo Equity may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Nationwide E Plus

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Gmo Equity and Nationwide Core

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

The idea behind Gmo Equity Allocation and Nationwide E Plus 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.