Correlation Between Nationwide Government and Thornburg Developing

Can any of the company-specific risk be diversified away by investing in both Nationwide Government and Thornburg Developing 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 Thornburg Developing 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 Thornburg Developing World, you can compare the effects of market volatilities on Nationwide Government and Thornburg Developing 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 Thornburg Developing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nationwide Government and Thornburg Developing.

Diversification Opportunities for Nationwide Government and Thornburg Developing

0.13

Correlation Coefficient

Nationwide Government  Thornburg Developing

Average diversification

The 3 months correlation between Nationwide and Thornburg is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Nationwide Government Bond and Thornburg Developing World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thornburg Developing 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 Thornburg Developing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thornburg Developing has no effect on the direction of Nationwide Government i.e., Nationwide Government and Thornburg Developing go up and down completely randomly.

Pair Corralation between Nationwide Government and Thornburg Developing

Assuming the 90 days horizon Nationwide Government Bond is expected to generate 0.09 times more return on investment than Thornburg Developing. However, Nationwide Government Bond is 11.15 times less risky than Thornburg Developing. It trades about 0.24 of its potential returns per unit of risk. Thornburg Developing World is currently generating about 0.01 per unit of risk. If you would invest  955.00  in Nationwide Government Bond on October 9, 2024 and sell it today you would earn a total of  89.00  from holding Nationwide Government Bond or generate 9.32% return on investment over 90 days.

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

Nationwide Government Bond  vs.  Thornburg Developing World

Nationwide Government

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nationwide Government Bond has generated negative risk-adjusted returns adding no value to fund investors. 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.

Thornburg Developing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thornburg Developing World has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Nationwide Government and Thornburg Developing

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

The idea behind Nationwide Government Bond and Thornburg Developing World 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.