Correlation Between Zacks Small and Nationwide Highmark

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

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

Diversification Opportunities for Zacks Small and Nationwide Highmark

0.98

Correlation Coefficient

Zacks Small  Nationwide Highmark

Almost no diversification

The 3 months correlation between Zacks and Nationwide is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Zacks Small Cap E and Nationwide Highmark Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Highmark Small and Zacks Small 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 Zacks Small Cap E are associated (or correlated) with Nationwide Highmark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Highmark Small has no effect on the direction of Zacks Small i.e., Zacks Small and Nationwide Highmark go up and down completely randomly.

Pair Corralation between Zacks Small and Nationwide Highmark

Assuming the 90 days horizon Zacks Small Cap E is expected to under-perform the Nationwide Highmark. In addition to that, Zacks Small is 1.73 times more volatile than Nationwide Highmark Small. It trades about -0.06 of its total potential returns per unit of risk. Nationwide Highmark Small is currently generating about -0.04 per unit of volatility. If you would invest  3,147  in Nationwide Highmark Small on October 20, 2024 and sell it today you would lose (180.00) from holding Nationwide Highmark Small or give up 5.72% of portfolio value over 90 days.

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

Zacks Small Cap E  vs.  Nationwide Highmark Small

Zacks Small Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zacks Small Cap E has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Nationwide Highmark Small

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Zacks Small and Nationwide Highmark

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

The idea behind Zacks Small Cap E and Nationwide Highmark 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.

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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.