Correlation Between SPDR SP and Nuveen ESG
Can any of the company-specific risk be diversified away by investing in both SPDR SP and Nuveen ESG 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 SPDR SP and Nuveen ESG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SP 400 and Nuveen ESG Mid Cap, you can compare the effects of market volatilities on SPDR SP and Nuveen ESG 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 SPDR SP with a short position of Nuveen ESG. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and Nuveen ESG.
Diversification Opportunities for SPDR SP and Nuveen ESG
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SPDR and Nuveen is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 400 and Nuveen ESG Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen ESG Mid and SPDR SP 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 SPDR SP 400 are associated (or correlated) with Nuveen ESG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen ESG Mid has no effect on the direction of SPDR SP i.e., SPDR SP and Nuveen ESG go up and down completely randomly.
Pair Corralation between SPDR SP and Nuveen ESG
Given the investment horizon of 90 days SPDR SP 400 is expected to generate 1.17 times more return on investment than Nuveen ESG. However, SPDR SP is 1.17 times more volatile than Nuveen ESG Mid Cap. It trades about 0.04 of its potential returns per unit of risk. Nuveen ESG Mid Cap is currently generating about 0.04 per unit of risk. If you would invest 6,970 in SPDR SP 400 on November 5, 2024 and sell it today you would earn a total of 1,364 from holding SPDR SP 400 or generate 19.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SP 400 vs. Nuveen ESG Mid Cap
Performance |
| Timeline |
| SPDR SP 400 |
| Nuveen ESG Mid |
SPDR SP and Nuveen ESG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and Nuveen ESG
The main advantage of trading using opposite SPDR SP and Nuveen ESG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, Nuveen ESG 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 ESG will offset losses from the drop in Nuveen ESG's long position.The idea behind SPDR SP 400 and Nuveen ESG Mid Cap pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Nuveen ESG vs. Nuveen ESG Small Cap | Nuveen ESG vs. Nuveen ESG Mid Cap | Nuveen ESG vs. Nuveen ESG Large Cap | Nuveen ESG vs. Nuveen ESG Large Cap |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
Other Complementary Tools
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments |