Correlation Between Nuveen High and Western Assets
Can any of the company-specific risk be diversified away by investing in both Nuveen High and Western Assets 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 Western Assets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nuveen High Yield and Western Assets Emerging, you can compare the effects of market volatilities on Nuveen High and Western Assets 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 Western Assets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen High and Western Assets.
Diversification Opportunities for Nuveen High and Western Assets
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nuveen and Western is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen High Yield and Western Assets Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Assets Emerging 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 Yield are associated (or correlated) with Western Assets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Assets Emerging has no effect on the direction of Nuveen High i.e., Nuveen High and Western Assets go up and down completely randomly.
Pair Corralation between Nuveen High and Western Assets
Assuming the 90 days horizon Nuveen High is expected to generate 1.75 times less return on investment than Western Assets. In addition to that, Nuveen High is 1.22 times more volatile than Western Assets Emerging. It trades about 0.08 of its total potential returns per unit of risk. Western Assets Emerging is currently generating about 0.17 per unit of volatility. If you would invest 1,059 in Western Assets Emerging on October 24, 2024 and sell it today you would earn a total of 9.00 from holding Western Assets Emerging or generate 0.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nuveen High Yield vs. Western Assets Emerging
Performance |
| Timeline |
| Nuveen High Yield |
| Western Assets Emerging |
Nuveen High and Western Assets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nuveen High and Western Assets
The main advantage of trading using opposite Nuveen High and Western Assets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nuveen High position performs unexpectedly, Western Assets 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 Western Assets will offset losses from the drop in Western Assets' long position.| Nuveen High vs. Nuveen High Yield | Nuveen High vs. Oppenheimer Roc High | Nuveen High vs. Nuveen High Yield | Nuveen High vs. Nuveen High Yield |
| Western Assets vs. Georgia Tax Free Bond | Western Assets vs. California Bond Fund | Western Assets vs. Nuveen High Yield | Western Assets vs. Leader Short Term Bond |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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