Correlation Between Nationwide Building and Zinc Media

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

By analyzing existing cross correlation between Nationwide Building Society and Zinc Media Group, you can compare the effects of market volatilities on Nationwide Building and Zinc Media 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 Building with a short position of Zinc Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nationwide Building and Zinc Media.

Diversification Opportunities for Nationwide Building and Zinc Media

0.1

Correlation Coefficient

Nationwide Building  Zinc Media

Average diversification

The 3 months correlation between Nationwide and Zinc is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Nationwide Building Society and Zinc Media Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zinc Media Group and Nationwide Building 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 Building Society are associated (or correlated) with Zinc Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zinc Media Group has no effect on the direction of Nationwide Building i.e., Nationwide Building and Zinc Media go up and down completely randomly.

Pair Corralation between Nationwide Building and Zinc Media

Assuming the 90 days trading horizon Nationwide Building Society is expected to under-perform the Zinc Media. But the stock apears to be less risky and, when comparing its historical volatility, Nationwide Building Society is 12.86 times less risky than Zinc Media. The stock trades about -0.23 of its potential returns per unit of risk. The Zinc Media Group is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  5,150  in Zinc Media Group on October 25, 2024 and sell it today you would earn a total of  700.00  from holding Zinc Media Group or generate 13.59% return on investment over 90 days.

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

Nationwide Building Society  vs.  Zinc Media Group

Nationwide Building

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nationwide Building Society has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Nationwide Building is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Zinc Media Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zinc Media Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Zinc Media is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Nationwide Building and Zinc Media

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

The idea behind Nationwide Building Society and Zinc Media Group 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.