Correlation Between Nationwide Fund and Royce International

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

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

Diversification Opportunities for Nationwide Fund and Royce International

0.81

Correlation Coefficient

Nationwide Fund  Royce International

Very poor diversification

The 3 months correlation between Nationwide and Royce is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Nationwide Fund Class and Royce International Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royce International and Nationwide Fund 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 Fund Class are associated (or correlated) with Royce International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royce International has no effect on the direction of Nationwide Fund i.e., Nationwide Fund and Royce International go up and down completely randomly.

Pair Corralation between Nationwide Fund and Royce International

Assuming the 90 days horizon Nationwide Fund Class is expected to generate 0.76 times more return on investment than Royce International. However, Nationwide Fund Class is 1.32 times less risky than Royce International. It trades about 0.24 of its potential returns per unit of risk. Royce International Small Cap is currently generating about 0.17 per unit of risk. If you would invest  3,036  in Nationwide Fund Class on May 28, 2025 and sell it today you would earn a total of  271.00  from holding Nationwide Fund Class or generate 8.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.41%
Values	Daily Returns

Nationwide Fund Class  vs.  Royce International Small Cap

Nationwide Fund Class

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Nationwide Fund Class are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Nationwide Fund may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Royce International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Royce International Small Cap are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Royce International may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Nationwide Fund and Royce International

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

The idea behind Nationwide Fund Class and Royce International Small Cap 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.