Correlation Between Sa Emerging and Nationwide Growth

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

By analyzing existing cross correlation between Sa Emerging Markets and Nationwide Growth Fund, you can compare the effects of market volatilities on Sa Emerging and Nationwide Growth 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 Sa Emerging with a short position of Nationwide Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sa Emerging and Nationwide Growth.

Diversification Opportunities for Sa Emerging and Nationwide Growth

0.37

Correlation Coefficient

Sa Emerging  Nationwide Growth

Weak diversification

The 3 months correlation between SAEMX and Nationwide is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Sa Emerging Markets and Nationwide Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Growth and Sa Emerging 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 Sa Emerging Markets are associated (or correlated) with Nationwide Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Growth has no effect on the direction of Sa Emerging i.e., Sa Emerging and Nationwide Growth go up and down completely randomly.

Pair Corralation between Sa Emerging and Nationwide Growth

Assuming the 90 days horizon Sa Emerging Markets is expected to under-perform the Nationwide Growth. But the mutual fund apears to be less risky and, when comparing its historical volatility, Sa Emerging Markets is 1.27 times less risky than Nationwide Growth. The mutual fund trades about -0.14 of its potential returns per unit of risk. The Nationwide Growth Fund is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,657  in Nationwide Growth Fund on October 22, 2024 and sell it today you would earn a total of  6.00  from holding Nationwide Growth Fund or generate 0.36% return on investment over 90 days.

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

Sa Emerging Markets  vs.  Nationwide Growth Fund

Sa Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

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

Nationwide Growth

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Sa Emerging and Nationwide Growth

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

The idea behind Sa Emerging Markets and Nationwide Growth Fund 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.