Correlation Between Nuveen Small and Highland Longshort
Can any of the company-specific risk be diversified away by investing in both Nuveen Small and Highland Longshort 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 Highland Longshort 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 Highland Longshort Healthcare, you can compare the effects of market volatilities on Nuveen Small and Highland Longshort 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 Highland Longshort. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen Small and Highland Longshort.
Diversification Opportunities for Nuveen Small and Highland Longshort
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nuveen and Highland is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Small Cap and Highland Longshort Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highland Longshort 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 Highland Longshort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highland Longshort has no effect on the direction of Nuveen Small i.e., Nuveen Small and Highland Longshort go up and down completely randomly.
Pair Corralation between Nuveen Small and Highland Longshort
Assuming the 90 days horizon Nuveen Small Cap is expected to generate 4.7 times more return on investment than Highland Longshort. However, Nuveen Small is 4.7 times more volatile than Highland Longshort Healthcare. It trades about 0.14 of its potential returns per unit of risk. Highland Longshort Healthcare is currently generating about 0.24 per unit of risk. If you would invest 1,553 in Nuveen Small Cap on November 4, 2024 and sell it today you would earn a total of 42.00 from holding Nuveen Small Cap or generate 2.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nuveen Small Cap vs. Highland Longshort Healthcare
Performance |
| Timeline |
| Nuveen Small Cap |
| Highland Longshort |
Nuveen Small and Highland Longshort Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nuveen Small and Highland Longshort
The main advantage of trading using opposite Nuveen Small and Highland Longshort positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nuveen Small position performs unexpectedly, Highland Longshort 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 Highland Longshort will offset losses from the drop in Highland Longshort's 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 |
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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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