Correlation Between Nuveen Small and Nuveen Equity
Can any of the company-specific risk be diversified away by investing in both Nuveen Small and Nuveen Equity 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 Small and Nuveen Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nuveen Small Cap and Nuveen Equity Longshort, you can compare the effects of market volatilities on Nuveen Small and Nuveen Equity 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 Small with a short position of Nuveen Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen Small and Nuveen Equity.
Diversification Opportunities for Nuveen Small and Nuveen Equity
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nuveen and Nuveen is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Small Cap and Nuveen Equity Longshort in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Equity Longshort and Nuveen Small 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 Small Cap are associated (or correlated) with Nuveen Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Equity Longshort has no effect on the direction of Nuveen Small i.e., Nuveen Small and Nuveen Equity go up and down completely randomly.
Pair Corralation between Nuveen Small and Nuveen Equity
Assuming the 90 days horizon Nuveen Small Cap is expected to generate 3.05 times more return on investment than Nuveen Equity. However, Nuveen Small is 3.05 times more volatile than Nuveen Equity Longshort. It trades about 0.25 of its potential returns per unit of risk. Nuveen Equity Longshort is currently generating about 0.24 per unit of risk. If you would invest 2,590 in Nuveen Small Cap on August 28, 2024 and sell it today you would earn a total of 252.00 from holding Nuveen Small Cap or generate 9.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nuveen Small Cap vs. Nuveen Equity Longshort
Performance |
| Timeline |
| Nuveen Small Cap |
| Nuveen Equity Longshort |
Nuveen Small and Nuveen Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nuveen Small and Nuveen Equity
The main advantage of trading using opposite Nuveen Small and Nuveen Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nuveen Small position performs unexpectedly, Nuveen Equity 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 Equity will offset losses from the drop in Nuveen Equity's long position.| Nuveen Small vs. Nuveen Small Cap | Nuveen Small vs. Nuveen Small Cap | Nuveen Small vs. First American Investment | Nuveen Small vs. Nuveen Mid Cap |
| Nuveen Equity vs. Nuveen Equity Longshort | Nuveen Equity vs. Nuveen Equity Longshort | Nuveen Equity vs. Praxis Growth Index | Nuveen Equity vs. Nasdaq 100 Fund Class |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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