Correlation Between Nationwide Inflation-protec and Destinations Municipal

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

By analyzing existing cross correlation between Nationwide Inflation Protected Securities and Destinations Municipal Fixed, you can compare the effects of market volatilities on Nationwide Inflation-protec and Destinations Municipal 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 Inflation-protec with a short position of Destinations Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nationwide Inflation-protec and Destinations Municipal.

Diversification Opportunities for Nationwide Inflation-protec and Destinations Municipal

0.8

Correlation Coefficient

Nationwide Inflation-protec  Destinations Municipal

Very poor diversification

The 3 months correlation between Nationwide and Destinations is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Nationwide Inflation Protected and Destinations Municipal Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Destinations Municipal and Nationwide Inflation-protec 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 Inflation Protected Securities are associated (or correlated) with Destinations Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Destinations Municipal has no effect on the direction of Nationwide Inflation-protec i.e., Nationwide Inflation-protec and Destinations Municipal go up and down completely randomly.

Pair Corralation between Nationwide Inflation-protec and Destinations Municipal

Assuming the 90 days horizon Nationwide Inflation Protected Securities is expected to generate 1.81 times more return on investment than Destinations Municipal. However, Nationwide Inflation-protec is 1.81 times more volatile than Destinations Municipal Fixed. It trades about 0.19 of its potential returns per unit of risk. Destinations Municipal Fixed is currently generating about 0.06 per unit of risk. If you would invest  878.00  in Nationwide Inflation Protected Securities on December 25, 2024 and sell it today you would earn a total of  26.00  from holding Nationwide Inflation Protected Securities or generate 2.96% return on investment over 90 days.

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

Nationwide Inflation Protected  vs.  Destinations Municipal Fixed

Nationwide Inflation-protec

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nationwide Inflation Protected Securities are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Nationwide Inflation-protec is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Destinations Municipal

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Destinations Municipal Fixed are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Destinations Municipal 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 Inflation-protec and Destinations Municipal

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

The idea behind Nationwide Inflation Protected Securities and Destinations Municipal Fixed 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.