Correlation Between Vanguard Ftse and Nationwide International

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

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

Diversification Opportunities for Vanguard Ftse and Nationwide International

0.92

Correlation Coefficient

Vanguard Ftse  Nationwide International

Almost no diversification

The 3 months correlation between Vanguard and Nationwide is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Ftse All World and Nationwide International Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide International and Vanguard Ftse 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 Vanguard Ftse All World are associated (or correlated) with Nationwide International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide International has no effect on the direction of Vanguard Ftse i.e., Vanguard Ftse and Nationwide International go up and down completely randomly.

Pair Corralation between Vanguard Ftse and Nationwide International

Assuming the 90 days horizon Vanguard Ftse All World is expected to generate 0.87 times more return on investment than Nationwide International. However, Vanguard Ftse All World is 1.15 times less risky than Nationwide International. It trades about 0.01 of its potential returns per unit of risk. Nationwide International Small is currently generating about -0.03 per unit of risk. If you would invest  22,909  in Vanguard Ftse All World on September 2, 2024 and sell it today you would earn a total of  91.00  from holding Vanguard Ftse All World or generate 0.4% return on investment over 90 days.

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

Vanguard Ftse All World  vs.  Nationwide International Small

Vanguard Ftse All

Risk-Adjusted Performance

0 of 100

Very Weak

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

Nationwide International

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Vanguard Ftse and Nationwide International

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

The idea behind Vanguard Ftse All World and Nationwide International Small 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.