Correlation Between Nationwide Mid and Dreyfus Smallcap

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

By analyzing existing cross correlation between Nationwide Mid Cap and Dreyfus Smallcap Stock, you can compare the effects of market volatilities on Nationwide Mid and Dreyfus Smallcap 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 Mid with a short position of Dreyfus Smallcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nationwide Mid and Dreyfus Smallcap.

Diversification Opportunities for Nationwide Mid and Dreyfus Smallcap

0.95

Correlation Coefficient

Nationwide Mid  Dreyfus Smallcap

Almost no diversification

The 3 months correlation between Nationwide and Dreyfus is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Nationwide Mid Cap and Dreyfus Smallcap Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Smallcap Stock and Nationwide Mid 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 Mid Cap are associated (or correlated) with Dreyfus Smallcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Smallcap Stock has no effect on the direction of Nationwide Mid i.e., Nationwide Mid and Dreyfus Smallcap go up and down completely randomly.

Pair Corralation between Nationwide Mid and Dreyfus Smallcap

Assuming the 90 days horizon Nationwide Mid Cap is expected to generate 0.79 times more return on investment than Dreyfus Smallcap. However, Nationwide Mid Cap is 1.27 times less risky than Dreyfus Smallcap. It trades about -0.2 of its potential returns per unit of risk. Dreyfus Smallcap Stock is currently generating about -0.2 per unit of risk. If you would invest  1,950  in Nationwide Mid Cap on November 29, 2024 and sell it today you would lose (338.00) from holding Nationwide Mid Cap or give up 17.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.33%
Values	Daily Returns

Nationwide Mid Cap  vs.  Dreyfus Smallcap Stock

Nationwide Mid Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nationwide Mid Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Dreyfus Smallcap Stock

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dreyfus Smallcap Stock has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's forward indicators remain fairly strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Nationwide Mid and Dreyfus Smallcap

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

The idea behind Nationwide Mid Cap and Dreyfus Smallcap Stock 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.