Correlation Between First Trust and Nuveen Credit
Can any of the company-specific risk be diversified away by investing in both First Trust and Nuveen Credit 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 First Trust and Nuveen Credit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Senior and Nuveen Credit Strategies, you can compare the effects of market volatilities on First Trust and Nuveen Credit 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 First Trust with a short position of Nuveen Credit. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Nuveen Credit.
Diversification Opportunities for First Trust and Nuveen Credit
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Nuveen is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Senior and Nuveen Credit Strategies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Credit Strategies and First Trust 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 First Trust Senior are associated (or correlated) with Nuveen Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Credit Strategies has no effect on the direction of First Trust i.e., First Trust and Nuveen Credit go up and down completely randomly.
Pair Corralation between First Trust and Nuveen Credit
Considering the 90-day investment horizon First Trust is expected to generate 1.22 times less return on investment than Nuveen Credit. But when comparing it to its historical volatility, First Trust Senior is 1.33 times less risky than Nuveen Credit. It trades about 0.1 of its potential returns per unit of risk. Nuveen Credit Strategies is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 557.00 in Nuveen Credit Strategies on August 28, 2024 and sell it today you would earn a total of 22.00 from holding Nuveen Credit Strategies or generate 3.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Senior vs. Nuveen Credit Strategies
Performance |
| Timeline |
| First Trust Senior |
| Nuveen Credit Strategies |
First Trust and Nuveen Credit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Nuveen Credit
The main advantage of trading using opposite First Trust and Nuveen Credit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Nuveen Credit 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 Credit will offset losses from the drop in Nuveen Credit's long position.| First Trust vs. Blackstone Gso Long | First Trust vs. Eaton Vance Senior | First Trust vs. Western Asset Global | First Trust vs. Western Asset Global |
| Nuveen Credit vs. Eaton Vance Floating | Nuveen Credit vs. NXG NextGen Infrastructure | Nuveen Credit vs. GAMCO Natural Resources | Nuveen Credit vs. MFS Investment Grade |
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 Stocks Directory module to find actively traded stocks across global markets.
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