Correlation Between Nationwide Mid and Blackrock

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

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

Diversification Opportunities for Nationwide Mid and Blackrock

0.75

Correlation Coefficient

Nationwide Mid  Blackrock

Poor diversification

The 3 months correlation between Nationwide and Blackrock is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Nationwide Mid Cap and Blackrock Sp 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Sp 500 and Nationwide Mid 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 Nationwide Mid Cap are associated (or correlated) with Blackrock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Sp 500 has no effect on the direction of Nationwide Mid i.e., Nationwide Mid and Blackrock go up and down completely randomly.

Pair Corralation between Nationwide Mid and Blackrock

Assuming the 90 days horizon Nationwide Mid Cap is expected to generate 1.06 times more return on investment than Blackrock. However, Nationwide Mid is 1.06 times more volatile than Blackrock Sp 500. It trades about -0.06 of its potential returns per unit of risk. Blackrock Sp 500 is currently generating about -0.07 per unit of risk. If you would invest  1,606  in Nationwide Mid Cap on December 24, 2024 and sell it today you would lose (68.00) from holding Nationwide Mid Cap or give up 4.23% of portfolio value over 90 days.

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

Nationwide Mid Cap  vs.  Blackrock Sp 500

Nationwide Mid Cap

Risk-Adjusted Performance

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 fairly strong basic indicators, Nationwide Mid is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Blackrock Sp 500

Risk-Adjusted Performance

Very Weak

Over the last 90 days Blackrock Sp 500 has generated negative risk-adjusted returns adding no value to fund investors. 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.

Pair Trading with Nationwide Mid and Blackrock

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

The idea behind Nationwide Mid Cap and Blackrock 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 Global Correlations module to find global opportunities by holding instruments from different markets.