Correlation Between Nationwide Nasdaq and Strategy Shares

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

By analyzing existing cross correlation between Nationwide Nasdaq 100 Risk Managed and Strategy Shares Nasdaq, you can compare the effects of market volatilities on Nationwide Nasdaq and Strategy Shares 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 Nationwide Nasdaq with a short position of Strategy Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nationwide Nasdaq and Strategy Shares.

Diversification Opportunities for Nationwide Nasdaq and Strategy Shares

0.2

Correlation Coefficient

Nationwide Nasdaq  Strategy Shares

Modest diversification

The 3 months correlation between Nationwide and Strategy is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Nationwide Nasdaq 100 Risk Man and Strategy Shares Nasdaq in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategy Shares Nasdaq and Nationwide Nasdaq 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 Nationwide Nasdaq 100 Risk Managed are associated (or correlated) with Strategy Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategy Shares Nasdaq has no effect on the direction of Nationwide Nasdaq i.e., Nationwide Nasdaq and Strategy Shares go up and down completely randomly.

Pair Corralation between Nationwide Nasdaq and Strategy Shares

Given the investment horizon of 90 days Nationwide Nasdaq is expected to generate 2.93 times less return on investment than Strategy Shares. In addition to that, Nationwide Nasdaq is 1.44 times more volatile than Strategy Shares Nasdaq. It trades about 0.06 of its total potential returns per unit of risk. Strategy Shares Nasdaq is currently generating about 0.25 per unit of volatility. If you would invest  2,160  in Strategy Shares Nasdaq on June 18, 2024 and sell it today you would earn a total of  48.00  from holding Strategy Shares Nasdaq or generate 2.22% return on investment over 90 days.

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

Nationwide Nasdaq 100 Risk Man  vs.  Strategy Shares Nasdaq

Nationwide Nasdaq 100

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nationwide Nasdaq 100 Risk Managed are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Nationwide Nasdaq is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Strategy Shares Nasdaq

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Strategy Shares Nasdaq are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental indicators, Strategy Shares is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Nationwide Nasdaq and Strategy Shares

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

The idea behind Nationwide Nasdaq 100 Risk Managed and Strategy Shares Nasdaq 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.