Correlation Between Oklahoma Municipal and Nationwide Mid

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

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

Diversification Opportunities for Oklahoma Municipal and Nationwide Mid

0.55

Correlation Coefficient

Oklahoma Municipal  Nationwide Mid

Very weak diversification

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

Pair Corralation between Oklahoma Municipal and Nationwide Mid

Assuming the 90 days horizon Oklahoma Municipal is expected to generate 4.89 times less return on investment than Nationwide Mid. But when comparing it to its historical volatility, Oklahoma Municipal Fund is 4.91 times less risky than Nationwide Mid. It trades about 0.02 of its potential returns per unit of risk. Nationwide Mid Cap is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,550  in Nationwide Mid Cap on October 4, 2024 and sell it today you would earn a total of  91.00  from holding Nationwide Mid Cap or generate 5.87% return on investment over 90 days.

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

Oklahoma Municipal Fund  vs.  Nationwide Mid Cap

Oklahoma Municipal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oklahoma Municipal Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Oklahoma Municipal is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Nationwide Mid Cap

Risk-Adjusted Performance

0 of 100

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 latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Oklahoma Municipal and Nationwide Mid

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

The idea behind Oklahoma Municipal Fund and Nationwide Mid Cap 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.

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 Money Managers module to screen money managers from public funds and ETFs managed around the world.