Correlation Between Dow Jones and Nuveen Ultra
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Nuveen Ultra 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 Dow Jones and Nuveen Ultra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Nuveen Ultra Short, you can compare the effects of market volatilities on Dow Jones and Nuveen Ultra 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 Dow Jones with a short position of Nuveen Ultra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Nuveen Ultra.
Diversification Opportunities for Dow Jones and Nuveen Ultra
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dow and Nuveen is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Nuveen Ultra Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Ultra Short and Dow Jones 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 Dow Jones Industrial are associated (or correlated) with Nuveen Ultra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Ultra Short has no effect on the direction of Dow Jones i.e., Dow Jones and Nuveen Ultra go up and down completely randomly.
Pair Corralation between Dow Jones and Nuveen Ultra
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 25.87 times more return on investment than Nuveen Ultra. However, Dow Jones is 25.87 times more volatile than Nuveen Ultra Short. It trades about 0.11 of its potential returns per unit of risk. Nuveen Ultra Short is currently generating about 0.79 per unit of risk. If you would invest 3,312,774 in Dow Jones Industrial on August 26, 2024 and sell it today you would earn a total of 1,116,877 from holding Dow Jones Industrial or generate 33.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 46.7% |
| Values | Daily Returns |
Dow Jones Industrial vs. Nuveen Ultra Short
Performance |
| Timeline |
Dow Jones and Nuveen Ultra Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Nuveen Ultra Short
Pair trading matchups for Nuveen Ultra
Pair Trading with Dow Jones and Nuveen Ultra
The main advantage of trading using opposite Dow Jones and Nuveen Ultra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Nuveen Ultra 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 Ultra will offset losses from the drop in Nuveen Ultra's long position.| Dow Jones vs. Vistra Energy Corp | Dow Jones vs. Fluence Energy | Dow Jones vs. Old Republic International | Dow Jones vs. Empresa Distribuidora y |
| Nuveen Ultra vs. First Trust Low | Nuveen Ultra vs. First Trust Senior | Nuveen Ultra vs. First Trust TCW | Nuveen Ultra vs. First Trust Tactical |
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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