Correlation Between Nationwide Bond and Nationwide Destination

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

By analyzing existing cross correlation between Nationwide Bond Fund and Nationwide Destination 2055, you can compare the effects of market volatilities on Nationwide Bond and Nationwide Destination 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 Bond with a short position of Nationwide Destination. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nationwide Bond and Nationwide Destination.

Diversification Opportunities for Nationwide Bond and Nationwide Destination

-0.55

Correlation Coefficient

Nationwide Bond  Nationwide Destination

Excellent diversification

The 3 months correlation between Nationwide and Nationwide is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Nationwide Bond Fund and Nationwide Destination 2055 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Destination and Nationwide Bond 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 Bond Fund are associated (or correlated) with Nationwide Destination. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Destination has no effect on the direction of Nationwide Bond i.e., Nationwide Bond and Nationwide Destination go up and down completely randomly.

Pair Corralation between Nationwide Bond and Nationwide Destination

Assuming the 90 days horizon Nationwide Bond Fund is expected to under-perform the Nationwide Destination. But the mutual fund apears to be less risky and, when comparing its historical volatility, Nationwide Bond Fund is 1.97 times less risky than Nationwide Destination. The mutual fund trades about -0.09 of its potential returns per unit of risk. The Nationwide Destination 2055 is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  1,460  in Nationwide Destination 2055 on September 5, 2024 and sell it today you would earn a total of  100.00  from holding Nationwide Destination 2055 or generate 6.85% return on investment over 90 days.

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

Nationwide Bond Fund  vs.  Nationwide Destination 2055

Nationwide Bond

Risk-Adjusted Performance

0 of 100

Very Weak

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

Nationwide Destination

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nationwide Destination 2055 are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Nationwide Destination may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Nationwide Bond and Nationwide Destination

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

The idea behind Nationwide Bond Fund and Nationwide Destination 2055 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.