Correlation Between Nationwide Bond and Salient International
Can any of the company-specific risk be diversified away by investing in both Nationwide Bond and Salient International 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 Bond and Salient International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nationwide Bond Fund and Salient International Real, you can compare the effects of market volatilities on Nationwide Bond and Salient International 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 Bond with a short position of Salient International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nationwide Bond and Salient International.
Diversification Opportunities for Nationwide Bond and Salient International
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Nationwide and Salient is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Nationwide Bond Fund and Salient International Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salient International and Nationwide Bond 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 Bond Fund are associated (or correlated) with Salient International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salient International has no effect on the direction of Nationwide Bond i.e., Nationwide Bond and Salient International go up and down completely randomly.
Pair Corralation between Nationwide Bond and Salient International
Assuming the 90 days horizon Nationwide Bond Fund is expected to generate 0.23 times more return on investment than Salient International. However, Nationwide Bond Fund is 4.28 times less risky than Salient International. It trades about -0.5 of its potential returns per unit of risk. Salient International Real is currently generating about -0.26 per unit of risk. If you would invest 829.00 in Nationwide Bond Fund on October 7, 2024 and sell it today you would lose (21.00) from holding Nationwide Bond Fund or give up 2.53% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Nationwide Bond Fund vs. Salient International Real
Performance |
Timeline |
Nationwide Bond |
Salient International |
Nationwide Bond and Salient International Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Nationwide Bond and Salient International
The main advantage of trading using opposite Nationwide Bond and Salient International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nationwide Bond position performs unexpectedly, Salient International 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 Salient International will offset losses from the drop in Salient International's long position.Nationwide Bond vs. Msift High Yield | Nationwide Bond vs. Virtus High Yield | Nationwide Bond vs. Voya High Yield | Nationwide Bond vs. Janus High Yield Fund |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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