Correlation Between Old Westbury and Nationwide Destination

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

By analyzing existing cross correlation between Old Westbury Large and Nationwide Destination 2055, you can compare the effects of market volatilities on Old Westbury and Nationwide Destination 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 Old Westbury with a short position of Nationwide Destination. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Westbury and Nationwide Destination.

Diversification Opportunities for Old Westbury and Nationwide Destination

0.86

Correlation Coefficient

Old Westbury  Nationwide Destination

Very poor diversification

The 3 months correlation between Old and Nationwide is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Old Westbury Large and Nationwide Destination 2055 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Destination and Old Westbury 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 Old Westbury Large are associated (or correlated) with Nationwide Destination. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Destination has no effect on the direction of Old Westbury i.e., Old Westbury and Nationwide Destination go up and down completely randomly.

Pair Corralation between Old Westbury and Nationwide Destination

Assuming the 90 days horizon Old Westbury Large is expected to generate 0.86 times more return on investment than Nationwide Destination. However, Old Westbury Large is 1.16 times less risky than Nationwide Destination. It trades about 0.07 of its potential returns per unit of risk. Nationwide Destination 2055 is currently generating about 0.03 per unit of risk. If you would invest  1,511  in Old Westbury Large on October 11, 2024 and sell it today you would earn a total of  486.00  from holding Old Westbury Large or generate 32.16% return on investment over 90 days.

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

Old Westbury Large  vs.  Nationwide Destination 2055

Old Westbury Large

Risk-Adjusted Performance

0 of 100

Very Weak

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

Nationwide Destination

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nationwide Destination 2055 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 February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Old Westbury and Nationwide Destination

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

The idea behind Old Westbury Large and Nationwide Destination 2055 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.