Correlation Between Nationwide Investor and Bright Rock

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

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

Diversification Opportunities for Nationwide Investor and Bright Rock

0.57

Correlation Coefficient

Nationwide Investor  Bright Rock

Very weak diversification

The 3 months correlation between Nationwide and Bright is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Nationwide Investor Destinatio and Bright Rock Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bright Rock Mid and Nationwide Investor 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 Investor Destinations are associated (or correlated) with Bright Rock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bright Rock Mid has no effect on the direction of Nationwide Investor i.e., Nationwide Investor and Bright Rock go up and down completely randomly.

Pair Corralation between Nationwide Investor and Bright Rock

Assuming the 90 days horizon Nationwide Investor Destinations is expected to generate 0.91 times more return on investment than Bright Rock. However, Nationwide Investor Destinations is 1.1 times less risky than Bright Rock. It trades about -0.04 of its potential returns per unit of risk. Bright Rock Mid is currently generating about -0.1 per unit of risk. If you would invest  905.00  in Nationwide Investor Destinations on December 30, 2024 and sell it today you would lose (16.00) from holding Nationwide Investor Destinations or give up 1.77% of portfolio value over 90 days.

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

Nationwide Investor Destinatio  vs.  Bright Rock Mid

Nationwide Investor

Risk-Adjusted Performance

Very Weak

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

Bright Rock Mid

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Nationwide Investor and Bright Rock

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

The idea behind Nationwide Investor Destinations and Bright Rock Mid 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.