Correlation Between Nuveen Small and American Funds
Can any of the company-specific risk be diversified away by investing in both Nuveen Small and American Funds 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 Nuveen Small and American Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nuveen Small Cap and American Funds 2065, you can compare the effects of market volatilities on Nuveen Small and American Funds 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 Nuveen Small with a short position of American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen Small and American Funds.
Diversification Opportunities for Nuveen Small and American Funds
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nuveen and American is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Small Cap and American Funds 2065 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds 2065 and Nuveen 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 Nuveen Small Cap are associated (or correlated) with American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds 2065 has no effect on the direction of Nuveen Small i.e., Nuveen Small and American Funds go up and down completely randomly.
Pair Corralation between Nuveen Small and American Funds
Assuming the 90 days horizon Nuveen Small is expected to generate 1.01 times less return on investment than American Funds. In addition to that, Nuveen Small is 1.35 times more volatile than American Funds 2065. It trades about 0.14 of its total potential returns per unit of risk. American Funds 2065 is currently generating about 0.19 per unit of volatility. If you would invest 1,758 in American Funds 2065 on November 4, 2024 and sell it today you would earn a total of 49.00 from holding American Funds 2065 or generate 2.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nuveen Small Cap vs. American Funds 2065
Performance |
| Timeline |
| Nuveen Small Cap |
| American Funds 2065 |
Nuveen Small and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nuveen Small and American Funds
The main advantage of trading using opposite Nuveen Small and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nuveen Small position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' long position.| Nuveen Small vs. Nuveen Minnesota Municipal | Nuveen Small vs. Nuveen Symphony Floating | Nuveen Small vs. Nuveen Symphony Floating | Nuveen Small vs. Nuveen Symphony Floating |
| American Funds vs. Putnam Global Financials | American Funds vs. Transamerica Financial Life | American Funds vs. Rmb Mendon Financial | American Funds vs. Vanguard Financials Index |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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