Correlation Between Nasdaq 100 and Nationwide Mid

Can any of the company-specific risk be diversified away by investing in both Nasdaq 100 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 Nasdaq 100 and Nationwide Mid into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nasdaq 100 2x Strategy and Nationwide Mid Cap, you can compare the effects of market volatilities on Nasdaq 100 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 Nasdaq 100 with a short position of Nationwide Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq 100 and Nationwide Mid.

Diversification Opportunities for Nasdaq 100 and Nationwide Mid

0.75

Correlation Coefficient

Nasdaq 100  Nationwide Mid

Poor diversification

The 3 months correlation between Nasdaq and Nationwide is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 2x Strategy 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 Nasdaq 100 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 Nasdaq 100 2x Strategy 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 Nasdaq 100 i.e., Nasdaq 100 and Nationwide Mid go up and down completely randomly.

Pair Corralation between Nasdaq 100 and Nationwide Mid

Assuming the 90 days horizon Nasdaq 100 2x Strategy is expected to generate 1.95 times more return on investment than Nationwide Mid. However, Nasdaq 100 is 1.95 times more volatile than Nationwide Mid Cap. It trades about 0.11 of its potential returns per unit of risk. Nationwide Mid Cap is currently generating about 0.03 per unit of risk. If you would invest  13,603  in Nasdaq 100 2x Strategy on September 22, 2024 and sell it today you would earn a total of  26,250  from holding Nasdaq 100 2x Strategy or generate 192.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Nasdaq 100 2x Strategy  vs.  Nationwide Mid Cap

Nasdaq 100 2x

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq 100 2x Strategy are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Nasdaq 100 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 Nasdaq 100 and Nationwide Mid

The main advantage of trading using opposite Nasdaq 100 and Nationwide Mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq 100 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 Nasdaq 100 2x Strategy 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.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.