Correlation Between Mutual Of and Nationwide

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

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

Diversification Opportunities for Mutual Of and Nationwide

-0.48

Correlation Coefficient

Mutual Of  Nationwide

Very good diversification

The 3 months correlation between Mutual and Nationwide is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Mutual Of America and Nationwide E Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide E Plus and Mutual Of 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 Mutual Of America are associated (or correlated) with Nationwide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide E Plus has no effect on the direction of Mutual Of i.e., Mutual Of and Nationwide go up and down completely randomly.

Pair Corralation between Mutual Of and Nationwide

Assuming the 90 days horizon Mutual Of America is expected to under-perform the Nationwide. In addition to that, Mutual Of is 2.81 times more volatile than Nationwide E Plus. It trades about -0.1 of its total potential returns per unit of risk. Nationwide E Plus is currently generating about 0.19 per unit of volatility. If you would invest  865.00  in Nationwide E Plus on December 30, 2024 and sell it today you would earn a total of  38.00  from holding Nationwide E Plus or generate 4.39% return on investment over 90 days.

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

Mutual Of America  vs.  Nationwide E Plus

Mutual Of America

Risk-Adjusted Performance

Very Weak

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

Nationwide E Plus

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nationwide E Plus are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Nationwide is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Mutual Of and Nationwide

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

The idea behind Mutual Of America and Nationwide E Plus 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.