Correlation Between Tax Managed and Nationwide Loomis

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

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

Diversification Opportunities for Tax Managed and Nationwide Loomis

0.68

Correlation Coefficient

Tax Managed  Nationwide Loomis

Poor diversification

The 3 months correlation between Tax and Nationwide is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Tax Managed Mid Small and Nationwide Loomis All in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Loomis All and Tax Managed 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 Tax Managed Mid Small are associated (or correlated) with Nationwide Loomis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Loomis All has no effect on the direction of Tax Managed i.e., Tax Managed and Nationwide Loomis go up and down completely randomly.

Pair Corralation between Tax Managed and Nationwide Loomis

Assuming the 90 days horizon Tax Managed Mid Small is expected to generate 0.73 times more return on investment than Nationwide Loomis. However, Tax Managed Mid Small is 1.37 times less risky than Nationwide Loomis. It trades about 0.04 of its potential returns per unit of risk. Nationwide Loomis All is currently generating about -0.01 per unit of risk. If you would invest  4,187  in Tax Managed Mid Small on October 24, 2024 and sell it today you would earn a total of  93.00  from holding Tax Managed Mid Small or generate 2.22% return on investment over 90 days.

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

Tax Managed Mid Small  vs.  Nationwide Loomis All

Tax Managed Mid

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tax Managed Mid Small are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Tax Managed is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Nationwide Loomis All

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Tax Managed and Nationwide Loomis

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

The idea behind Tax Managed Mid Small and Nationwide Loomis All 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.