Correlation Between Nuveen High and First Trust
Can any of the company-specific risk be diversified away by investing in both Nuveen High and First Trust 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 High and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nuveen High Income and First Trust Mlp, you can compare the effects of market volatilities on Nuveen High and First Trust 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 High with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen High and First Trust.
Diversification Opportunities for Nuveen High and First Trust
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nuveen and First is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen High Income and First Trust Mlp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Mlp and Nuveen High 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 High Income are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Mlp has no effect on the direction of Nuveen High i.e., Nuveen High and First Trust go up and down completely randomly.
Pair Corralation between Nuveen High and First Trust
Given the investment horizon of 90 days Nuveen High is expected to generate 9.92 times less return on investment than First Trust. But when comparing it to its historical volatility, Nuveen High Income is 6.16 times less risky than First Trust. It trades about 0.1 of its potential returns per unit of risk. First Trust Mlp is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 774.00 in First Trust Mlp on August 31, 2024 and sell it today you would earn a total of 41.00 from holding First Trust Mlp or generate 5.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nuveen High Income vs. First Trust Mlp
Performance |
| Timeline |
| Nuveen High Income |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| First Trust Mlp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Nuveen High and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nuveen High and First Trust
The main advantage of trading using opposite Nuveen High and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nuveen High position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| Nuveen High vs. MFS Investment Grade | Nuveen High vs. Eaton Vance National | Nuveen High vs. Invesco High Income | Nuveen High vs. Nuveen California Select |
| First Trust vs. Franklin Templeton Limited | First Trust vs. Blackrock Floating Rate | First Trust vs. Cohen Steers Limited | First Trust vs. Eagle Point Income |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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