Correlation Between Nationwide Geneva and Gabelli Healthcare

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

By analyzing existing cross correlation between Nationwide Geneva Small and The Gabelli Healthcare, you can compare the effects of market volatilities on Nationwide Geneva and Gabelli Healthcare 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 Geneva with a short position of Gabelli Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nationwide Geneva and Gabelli Healthcare.

Diversification Opportunities for Nationwide Geneva and Gabelli Healthcare

0.06

Correlation Coefficient

Nationwide Geneva  Gabelli Healthcare

Significant diversification

The 3 months correlation between Nationwide and Gabelli is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Nationwide Geneva Small and The Gabelli Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Gabelli Healthcare and Nationwide Geneva 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 Geneva Small are associated (or correlated) with Gabelli Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Gabelli Healthcare has no effect on the direction of Nationwide Geneva i.e., Nationwide Geneva and Gabelli Healthcare go up and down completely randomly.

Pair Corralation between Nationwide Geneva and Gabelli Healthcare

Assuming the 90 days horizon Nationwide Geneva Small is expected to under-perform the Gabelli Healthcare. In addition to that, Nationwide Geneva is 1.1 times more volatile than The Gabelli Healthcare. It trades about -0.17 of its total potential returns per unit of risk. The Gabelli Healthcare is currently generating about 0.03 per unit of volatility. If you would invest  1,111  in The Gabelli Healthcare on December 24, 2024 and sell it today you would earn a total of  15.00  from holding The Gabelli Healthcare or generate 1.35% return on investment over 90 days.

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

Nationwide Geneva Small  vs.  The Gabelli Healthcare

Nationwide Geneva Small

Risk-Adjusted Performance

Very Weak

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

The Gabelli Healthcare

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The Gabelli Healthcare are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Gabelli Healthcare 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 Geneva and Gabelli Healthcare

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

The idea behind Nationwide Geneva Small and The Gabelli Healthcare 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.