Correlation Between Resq Dynamic and Nationwide Small

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

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

Diversification Opportunities for Resq Dynamic and Nationwide Small

0.7

Correlation Coefficient

Resq Dynamic  Nationwide Small

Poor diversification

The 3 months correlation between Resq and Nationwide is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Resq Dynamic Allocation and Nationwide Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Small Cap and Resq Dynamic 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 Resq Dynamic Allocation are associated (or correlated) with Nationwide Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Small Cap has no effect on the direction of Resq Dynamic i.e., Resq Dynamic and Nationwide Small go up and down completely randomly.

Pair Corralation between Resq Dynamic and Nationwide Small

Assuming the 90 days horizon Resq Dynamic Allocation is expected to generate 0.79 times more return on investment than Nationwide Small. However, Resq Dynamic Allocation is 1.27 times less risky than Nationwide Small. It trades about -0.03 of its potential returns per unit of risk. Nationwide Small Cap is currently generating about -0.12 per unit of risk. If you would invest  1,030  in Resq Dynamic Allocation on December 29, 2024 and sell it today you would lose (19.00) from holding Resq Dynamic Allocation or give up 1.84% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Resq Dynamic Allocation  vs.  Nationwide Small Cap

Resq Dynamic Allocation

Risk-Adjusted Performance

Very Weak

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

Nationwide Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nationwide Small 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 Resq Dynamic and Nationwide Small

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

The idea behind Resq Dynamic Allocation and Nationwide Small 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.

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