Correlation Between Nuveen Dow and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Nuveen Dow and Dow Jones 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 Dow and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nuveen Dow 30Sm and Dow Jones Industrial, you can compare the effects of market volatilities on Nuveen Dow and Dow Jones 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 Dow with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen Dow and Dow Jones.
Diversification Opportunities for Nuveen Dow and Dow Jones
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Nuveen and Dow is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Dow 30Sm and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Nuveen Dow 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 Dow 30Sm are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Nuveen Dow i.e., Nuveen Dow and Dow Jones go up and down completely randomly.
Pair Corralation between Nuveen Dow and Dow Jones
Given the investment horizon of 90 days Nuveen Dow 30Sm is expected to generate 0.66 times more return on investment than Dow Jones. However, Nuveen Dow 30Sm is 1.51 times less risky than Dow Jones. It trades about 0.41 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.26 per unit of risk. If you would invest 1,478 in Nuveen Dow 30Sm on August 29, 2024 and sell it today you would earn a total of 90.00 from holding Nuveen Dow 30Sm or generate 6.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nuveen Dow 30Sm vs. Dow Jones Industrial
Performance |
| Timeline |
Nuveen Dow and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Nuveen Dow 30Sm
Pair trading matchups for Nuveen Dow
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Nuveen Dow and Dow Jones
The main advantage of trading using opposite Nuveen Dow and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nuveen Dow position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Nuveen Dow vs. Nuveen SP 500 | Nuveen Dow vs. Nuveen NASDAQ 100 | Nuveen Dow vs. Nuveen Real Estate | Nuveen Dow vs. Blackrock International Growth |
| Dow Jones vs. Kaltura | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. US Global Investors | Dow Jones vs. Analog Devices |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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