Correlation Between American Funds and Nuveen Dow
Can any of the company-specific risk be diversified away by investing in both American Funds and Nuveen Dow 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 American Funds and Nuveen Dow into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds Fundamental and Nuveen Dow 30, you can compare the effects of market volatilities on American Funds and Nuveen Dow 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 American Funds with a short position of Nuveen Dow. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Nuveen Dow.
Diversification Opportunities for American Funds and Nuveen Dow
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Nuveen is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Fundamental and Nuveen Dow 30 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Dow 30 and American Funds 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 American Funds Fundamental are associated (or correlated) with Nuveen Dow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Dow 30 has no effect on the direction of American Funds i.e., American Funds and Nuveen Dow go up and down completely randomly.
Pair Corralation between American Funds and Nuveen Dow
Assuming the 90 days horizon American Funds is expected to generate 1.14 times less return on investment than Nuveen Dow. In addition to that, American Funds is 1.61 times more volatile than Nuveen Dow 30. It trades about 0.04 of its total potential returns per unit of risk. Nuveen Dow 30 is currently generating about 0.06 per unit of volatility. If you would invest 1,613 in Nuveen Dow 30 on October 22, 2024 and sell it today you would earn a total of 99.00 from holding Nuveen Dow 30 or generate 6.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds Fundamental vs. Nuveen Dow 30
Performance |
| Timeline |
| American Funds Funda |
| Nuveen Dow 30 |
American Funds and Nuveen Dow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Nuveen Dow
The main advantage of trading using opposite American Funds and Nuveen Dow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Nuveen Dow 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 Nuveen Dow will offset losses from the drop in Nuveen Dow's long position.| American Funds vs. Ab Large Cap | American Funds vs. Qs Large Cap | American Funds vs. Tax Managed Large Cap | American Funds vs. Avantis Large Cap |
| Nuveen Dow vs. T Rowe Price | Nuveen Dow vs. Ab Small Cap | Nuveen Dow vs. Artisan Small Cap | Nuveen Dow vs. Tfa Alphagen Growth |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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