Correlation Between Nationwide and Global X

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

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

Diversification Opportunities for Nationwide and Global X

0.73

Correlation Coefficient

Nationwide  Global X

Poor diversification

The 3 months correlation between Nationwide and Global is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Nationwide and Global X SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X SP and Nationwide 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 are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X SP has no effect on the direction of Nationwide i.e., Nationwide and Global X go up and down completely randomly.

Pair Corralation between Nationwide and Global X

If you would invest  3,017  in Global X SP on September 29, 2024 and sell it today you would earn a total of  323.00  from holding Global X SP or generate 10.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	0.79%
Values	Daily Returns

Nationwide  vs.  Global X SP

Nationwide

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nationwide has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward-looking indicators, Nationwide is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Global X SP

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Global X SP are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, Global X is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Nationwide and Global X

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

The idea behind Nationwide and Global X SP 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.