Correlation Between Nationwide Bailard and Touchstone Ultra

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

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

Diversification Opportunities for Nationwide Bailard and Touchstone Ultra

-0.55

Correlation Coefficient

Nationwide Bailard  Touchstone Ultra

Excellent diversification

The 3 months correlation between Nationwide and Touchstone is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Nationwide Bailard Technology and Touchstone Ultra Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Ultra Short and Nationwide Bailard 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 Bailard Technology are associated (or correlated) with Touchstone Ultra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Ultra Short has no effect on the direction of Nationwide Bailard i.e., Nationwide Bailard and Touchstone Ultra go up and down completely randomly.

Pair Corralation between Nationwide Bailard and Touchstone Ultra

Assuming the 90 days horizon Nationwide Bailard Technology is expected to under-perform the Touchstone Ultra. In addition to that, Nationwide Bailard is 15.12 times more volatile than Touchstone Ultra Short. It trades about -0.08 of its total potential returns per unit of risk. Touchstone Ultra Short is currently generating about 0.18 per unit of volatility. If you would invest  913.00  in Touchstone Ultra Short on December 24, 2024 and sell it today you would earn a total of  11.00  from holding Touchstone Ultra Short or generate 1.2% return on investment over 90 days.

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

Nationwide Bailard Technology  vs.  Touchstone Ultra Short

Nationwide Bailard

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nationwide Bailard Technology 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.

Touchstone Ultra Short

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Touchstone Ultra Short are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Touchstone Ultra 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 Bailard and Touchstone Ultra

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

The idea behind Nationwide Bailard Technology and Touchstone Ultra Short 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 Transaction History module to view history of all your transactions and understand their impact on performance.