Correlation Between Nuveen Short and First Trust
Can any of the company-specific risk be diversified away by investing in both Nuveen Short 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 Short 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 Short Duration and First Trust Senior, you can compare the effects of market volatilities on Nuveen Short 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 Short with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen Short and First Trust.
Diversification Opportunities for Nuveen Short and First Trust
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Nuveen and First is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Short Duration and First Trust Senior in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Senior and Nuveen Short 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 Short Duration 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 Senior has no effect on the direction of Nuveen Short i.e., Nuveen Short and First Trust go up and down completely randomly.
Pair Corralation between Nuveen Short and First Trust
Considering the 90-day investment horizon Nuveen Short is expected to generate 1.92 times less return on investment than First Trust. But when comparing it to its historical volatility, Nuveen Short Duration is 1.03 times less risky than First Trust. It trades about 0.06 of its potential returns per unit of risk. First Trust Senior is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 761.00 in First Trust Senior on November 1, 2024 and sell it today you would earn a total of 284.00 from holding First Trust Senior or generate 37.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 19.62% |
| Values | Daily Returns |
Nuveen Short Duration vs. First Trust Senior
Performance |
| Timeline |
| Nuveen Short Duration |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| First Trust Senior |
Nuveen Short and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nuveen Short and First Trust
The main advantage of trading using opposite Nuveen Short and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nuveen Short 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 Short vs. Virtus Global Multi | Nuveen Short vs. Western Asset Mortgage | Nuveen Short vs. Western Asset High | Nuveen Short vs. Western Asset High |
| First Trust vs. Blackstone Gso Long | First Trust vs. Eaton Vance Senior | First Trust vs. Western Asset Global | First Trust vs. Western Asset Global |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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