Correlation Between Heartland Value and Nationwide Mellon

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

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

Diversification Opportunities for Heartland Value and Nationwide Mellon

0.67

Correlation Coefficient

Heartland Value  Nationwide Mellon

Poor diversification

The 3 months correlation between Heartland and Nationwide is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Heartland Value Plus and Nationwide Mellon Disciplined in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Mellon and Heartland Value 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 Heartland Value Plus are associated (or correlated) with Nationwide Mellon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Mellon has no effect on the direction of Heartland Value i.e., Heartland Value and Nationwide Mellon go up and down completely randomly.

Pair Corralation between Heartland Value and Nationwide Mellon

Assuming the 90 days horizon Heartland Value is expected to generate 6.14 times less return on investment than Nationwide Mellon. In addition to that, Heartland Value is 1.19 times more volatile than Nationwide Mellon Disciplined. It trades about 0.0 of its total potential returns per unit of risk. Nationwide Mellon Disciplined is currently generating about 0.01 per unit of volatility. If you would invest  3,182  in Nationwide Mellon Disciplined on September 29, 2024 and sell it today you would earn a total of  140.00  from holding Nationwide Mellon Disciplined or generate 4.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Heartland Value Plus  vs.  Nationwide Mellon Disciplined

Heartland Value Plus

Risk-Adjusted Performance

0 of 100

Very Weak

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

Nationwide Mellon

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nationwide Mellon Disciplined has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's primary indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Heartland Value and Nationwide Mellon

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

The idea behind Heartland Value Plus and Nationwide Mellon Disciplined 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.

Check out your portfolio center.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.