Correlation Between Siit Ultra and Nationwide Fund

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

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

Diversification Opportunities for Siit Ultra and Nationwide Fund

0.8

Correlation Coefficient

Siit Ultra  Nationwide Fund

Very poor diversification

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

Pair Corralation between Siit Ultra and Nationwide Fund

Assuming the 90 days horizon Siit Ultra is expected to generate 11.78 times less return on investment than Nationwide Fund. But when comparing it to its historical volatility, Siit Ultra Short is 7.96 times less risky than Nationwide Fund. It trades about 0.13 of its potential returns per unit of risk. Nationwide Fund Institutional is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  3,244  in Nationwide Fund Institutional on September 12, 2024 and sell it today you would earn a total of  280.00  from holding Nationwide Fund Institutional or generate 8.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Siit Ultra Short  vs.  Nationwide Fund Institutional

Siit Ultra Short

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Siit Ultra Short are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Siit Ultra is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Nationwide Fund Inst

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nationwide Fund Institutional are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Nationwide Fund may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Siit Ultra and Nationwide Fund

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

The idea behind Siit Ultra Short and Nationwide Fund Institutional 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.