Correlation Between Saat Market and Nationwide Bny

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

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

Diversification Opportunities for Saat Market and Nationwide Bny

0.8

Correlation Coefficient

Saat Market  Nationwide Bny

Very poor diversification

The 3 months correlation between Saat and Nationwide is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Saat Market Growth and Nationwide Bny Mellon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Bny Mellon and Saat Market 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 Saat Market Growth are associated (or correlated) with Nationwide Bny. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Bny Mellon has no effect on the direction of Saat Market i.e., Saat Market and Nationwide Bny go up and down completely randomly.

Pair Corralation between Saat Market and Nationwide Bny

Assuming the 90 days horizon Saat Market Growth is expected to under-perform the Nationwide Bny. But the mutual fund apears to be less risky and, when comparing its historical volatility, Saat Market Growth is 1.34 times less risky than Nationwide Bny. The mutual fund trades about -0.17 of its potential returns per unit of risk. The Nationwide Bny Mellon is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest  1,731  in Nationwide Bny Mellon on October 9, 2024 and sell it today you would lose (73.00) from holding Nationwide Bny Mellon or give up 4.22% of portfolio value over 90 days.

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

Saat Market Growth  vs.  Nationwide Bny Mellon

Saat Market Growth

Risk-Adjusted Performance

0 of 100

Very Weak

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

Nationwide Bny Mellon

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Saat Market and Nationwide Bny

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

The idea behind Saat Market Growth and Nationwide Bny Mellon 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.

Check out your portfolio center.

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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.