Correlation Between Western Asset and Nuveen Core
Can any of the company-specific risk be diversified away by investing in both Western Asset and Nuveen Core 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 Western Asset and Nuveen Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Global and Nuveen Core Equity, you can compare the effects of market volatilities on Western Asset and Nuveen Core 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 Western Asset with a short position of Nuveen Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Nuveen Core.
Diversification Opportunities for Western Asset and Nuveen Core
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Western and Nuveen is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Global and Nuveen Core Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Core Equity and Western Asset 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 Western Asset Global are associated (or correlated) with Nuveen Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Core Equity has no effect on the direction of Western Asset i.e., Western Asset and Nuveen Core go up and down completely randomly.
Pair Corralation between Western Asset and Nuveen Core
Considering the 90-day investment horizon Western Asset is expected to generate 3.29 times less return on investment than Nuveen Core. But when comparing it to its historical volatility, Western Asset Global is 1.06 times less risky than Nuveen Core. It trades about 0.08 of its potential returns per unit of risk. Nuveen Core Equity is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 1,512 in Nuveen Core Equity on August 31, 2024 and sell it today you would earn a total of 55.00 from holding Nuveen Core Equity or generate 3.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Global vs. Nuveen Core Equity
Performance |
| Timeline |
| Western Asset Global |
| Nuveen Core Equity |
Western Asset and Nuveen Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Nuveen Core
The main advantage of trading using opposite Western Asset and Nuveen Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Nuveen Core 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 Core will offset losses from the drop in Nuveen Core's long position.| Western Asset vs. MFS Investment Grade | Western Asset vs. Eaton Vance Municipal | Western Asset vs. DTF Tax Free | Western Asset vs. HUMANA INC |
| Nuveen Core vs. MFS Investment Grade | Nuveen Core vs. Eaton Vance Municipal | Nuveen Core vs. DTF Tax Free | Nuveen Core vs. HUMANA INC |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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