Correlation Between Nationwide Government and Idx Risk-managed

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

By analyzing existing cross correlation between Nationwide Government Bond and Idx Risk Managed Bitcoin, you can compare the effects of market volatilities on Nationwide Government and Idx Risk-managed 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 Government with a short position of Idx Risk-managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nationwide Government and Idx Risk-managed.

Diversification Opportunities for Nationwide Government and Idx Risk-managed

-0.28

Correlation Coefficient

Nationwide Government  Idx Risk-managed

Very good diversification

The 3 months correlation between Nationwide and IDX is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Nationwide Government Bond and Idx Risk Managed Bitcoin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Idx Risk Managed and Nationwide Government 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 Government Bond are associated (or correlated) with Idx Risk-managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Idx Risk Managed has no effect on the direction of Nationwide Government i.e., Nationwide Government and Idx Risk-managed go up and down completely randomly.

Pair Corralation between Nationwide Government and Idx Risk-managed

Assuming the 90 days horizon Nationwide Government Bond is expected to generate 0.02 times more return on investment than Idx Risk-managed. However, Nationwide Government Bond is 49.43 times less risky than Idx Risk-managed. It trades about 0.47 of its potential returns per unit of risk. Idx Risk Managed Bitcoin is currently generating about -0.12 per unit of risk. If you would invest  1,042  in Nationwide Government Bond on December 20, 2024 and sell it today you would earn a total of  11.00  from holding Nationwide Government Bond or generate 1.06% return on investment over 90 days.

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

Nationwide Government Bond  vs.  Idx Risk Managed Bitcoin

Nationwide Government

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Nationwide Government Bond are ranked lower than 36 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Nationwide Government is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Idx Risk Managed

Risk-Adjusted Performance

Very Weak

Over the last 90 days Idx Risk Managed Bitcoin has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Nationwide Government and Idx Risk-managed

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

The idea behind Nationwide Government Bond and Idx Risk Managed Bitcoin 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.