Correlation Between Us Small and Nationwide International

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

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

Diversification Opportunities for Us Small and Nationwide International

-0.58

Correlation Coefficient

Us Small  Nationwide International

Excellent diversification

The 3 months correlation between RLESX and Nationwide is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Us Small Cap and Nationwide International Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide International and Us Small 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 Us Small Cap are associated (or correlated) with Nationwide International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide International has no effect on the direction of Us Small i.e., Us Small and Nationwide International go up and down completely randomly.

Pair Corralation between Us Small and Nationwide International

Assuming the 90 days horizon Us Small Cap is expected to under-perform the Nationwide International. In addition to that, Us Small is 1.37 times more volatile than Nationwide International Small. It trades about -0.1 of its total potential returns per unit of risk. Nationwide International Small is currently generating about 0.11 per unit of volatility. If you would invest  908.00  in Nationwide International Small on December 27, 2024 and sell it today you would earn a total of  53.00  from holding Nationwide International Small or generate 5.84% return on investment over 90 days.

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

Us Small Cap  vs.  Nationwide International Small

Us Small Cap

Risk-Adjusted Performance

Very Weak

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

Nationwide International

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nationwide International Small are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Nationwide International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Us Small and Nationwide International

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

The idea behind Us Small Cap and Nationwide International Small 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.