Correlation Between Qs Large and Nationwide Inflation-protec

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

By analyzing existing cross correlation between Qs Large Cap and Nationwide Inflation Protected Securities, you can compare the effects of market volatilities on Qs Large and Nationwide Inflation-protec 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 Qs Large with a short position of Nationwide Inflation-protec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qs Large and Nationwide Inflation-protec.

Diversification Opportunities for Qs Large and Nationwide Inflation-protec

-0.63

Correlation Coefficient

Qs Large  Nationwide Inflation-protec

Excellent diversification

The 3 months correlation between LMTIX and Nationwide is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Qs Large Cap and Nationwide Inflation Protected in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Inflation-protec and Qs Large 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 Qs Large Cap are associated (or correlated) with Nationwide Inflation-protec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Inflation-protec has no effect on the direction of Qs Large i.e., Qs Large and Nationwide Inflation-protec go up and down completely randomly.

Pair Corralation between Qs Large and Nationwide Inflation-protec

Assuming the 90 days horizon Qs Large Cap is expected to under-perform the Nationwide Inflation-protec. In addition to that, Qs Large is 4.28 times more volatile than Nationwide Inflation Protected Securities. It trades about -0.11 of its total potential returns per unit of risk. Nationwide Inflation Protected Securities is currently generating about 0.24 per unit of volatility. If you would invest  877.00  in Nationwide Inflation Protected Securities on December 22, 2024 and sell it today you would earn a total of  31.00  from holding Nationwide Inflation Protected Securities or generate 3.53% return on investment over 90 days.

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

Qs Large Cap  vs.  Nationwide Inflation Protected

Qs Large Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Qs Large Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Nationwide Inflation-protec

Risk-Adjusted Performance

Solid

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

Pair Trading with Qs Large and Nationwide Inflation-protec

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

The idea behind Qs Large Cap and Nationwide Inflation Protected Securities 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.