Correlation Between Nationwide Mid and Goldman Sachs

Can any of the company-specific risk be diversified away by investing in both Nationwide Mid and Goldman Sachs 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 Goldman Sachs 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 Goldman Sachs Technology, you can compare the effects of market volatilities on Nationwide Mid and Goldman Sachs 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 Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nationwide Mid and Goldman Sachs.

Diversification Opportunities for Nationwide Mid and Goldman Sachs

0.93

Correlation Coefficient

Nationwide Mid  Goldman Sachs

Almost no diversification

The 3 months correlation between Nationwide and Goldman is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Nationwide Mid Cap and Goldman Sachs Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Technology 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 Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs Technology has no effect on the direction of Nationwide Mid i.e., Nationwide Mid and Goldman Sachs go up and down completely randomly.

Pair Corralation between Nationwide Mid and Goldman Sachs

Assuming the 90 days horizon Nationwide Mid is expected to generate 1.82 times less return on investment than Goldman Sachs. But when comparing it to its historical volatility, Nationwide Mid Cap is 1.21 times less risky than Goldman Sachs. It trades about 0.15 of its potential returns per unit of risk. Goldman Sachs Technology is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  3,216  in Goldman Sachs Technology on September 13, 2024 and sell it today you would earn a total of  540.00  from holding Goldman Sachs Technology or generate 16.79% return on investment over 90 days.

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

Nationwide Mid Cap  vs.  Goldman Sachs Technology

Nationwide Mid Cap

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nationwide Mid Cap are ranked lower than 11 (%) 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.

Goldman Sachs Technology

Risk-Adjusted Performance

17 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Technology are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Goldman Sachs showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nationwide Mid and Goldman Sachs

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

The idea behind Nationwide Mid Cap and Goldman Sachs Technology 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.