Correlation Between Dow Jones and Nuveen Short-duration
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Nuveen Short-duration 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 Short-duration 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 Short Duration High, you can compare the effects of market volatilities on Dow Jones and Nuveen Short-duration 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 Short-duration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Nuveen Short-duration.
Diversification Opportunities for Dow Jones and Nuveen Short-duration
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dow and Nuveen is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Nuveen Short Duration High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Short Duration 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 Short-duration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Short Duration has no effect on the direction of Dow Jones i.e., Dow Jones and Nuveen Short-duration go up and down completely randomly.
Pair Corralation between Dow Jones and Nuveen Short-duration
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 3.92 times more return on investment than Nuveen Short-duration. However, Dow Jones is 3.92 times more volatile than Nuveen Short Duration High. It trades about 0.17 of its potential returns per unit of risk. Nuveen Short Duration High is currently generating about 0.05 per unit of risk. If you would invest 4,233,015 in Dow Jones Industrial on August 29, 2024 and sell it today you would earn a total of 253,016 from holding Dow Jones Industrial or generate 5.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.67% |
| Values | Daily Returns |
Dow Jones Industrial vs. Nuveen Short Duration High
Performance |
| Timeline |
Dow Jones and Nuveen Short-duration Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Nuveen Short Duration High
Pair trading matchups for Nuveen Short-duration
Pair Trading with Dow Jones and Nuveen Short-duration
The main advantage of trading using opposite Dow Jones and Nuveen Short-duration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Nuveen Short-duration 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 Short-duration will offset losses from the drop in Nuveen Short-duration's long position.| Dow Jones vs. Kaltura | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. US Global Investors | Dow Jones vs. Analog Devices |
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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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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