Correlation Between Intrepid Income and Nationwide Small

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

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

Diversification Opportunities for Intrepid Income and Nationwide Small

0.86

Correlation Coefficient

Intrepid Income  Nationwide Small

Very poor diversification

The 3 months correlation between Intrepid and Nationwide is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Intrepid Income Fund and Nationwide Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Small Cap and Intrepid Income 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 Intrepid Income Fund are associated (or correlated) with Nationwide Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Small Cap has no effect on the direction of Intrepid Income i.e., Intrepid Income and Nationwide Small go up and down completely randomly.

Pair Corralation between Intrepid Income and Nationwide Small

Assuming the 90 days horizon Intrepid Income is expected to generate 4.32 times less return on investment than Nationwide Small. But when comparing it to its historical volatility, Intrepid Income Fund is 10.24 times less risky than Nationwide Small. It trades about 0.23 of its potential returns per unit of risk. Nationwide Small Cap is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,245  in Nationwide Small Cap on September 15, 2024 and sell it today you would earn a total of  93.00  from holding Nationwide Small Cap or generate 7.47% return on investment over 90 days.

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

Intrepid Income Fund  vs.  Nationwide Small Cap

Intrepid Income

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Intrepid Income Fund are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Intrepid Income is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Nationwide Small Cap

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nationwide Small Cap are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Nationwide Small may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Intrepid Income and Nationwide Small

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

The idea behind Intrepid Income Fund and Nationwide Small 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.