Correlation Between Nuveen High and Nuveen Short-duration
Can any of the company-specific risk be diversified away by investing in both Nuveen High and Nuveen Short-duration 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 Nuveen Short-duration 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 Nuveen Short Duration High, you can compare the effects of market volatilities on Nuveen High and Nuveen Short-duration 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 Nuveen Short-duration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen High and Nuveen Short-duration.
Diversification Opportunities for Nuveen High and Nuveen Short-duration
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Nuveen and Nuveen is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen High Yield and Nuveen Short Duration High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Short Duration 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 Nuveen Short-duration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Short Duration has no effect on the direction of Nuveen High i.e., Nuveen High and Nuveen Short-duration go up and down completely randomly.
Pair Corralation between Nuveen High and Nuveen Short-duration
Assuming the 90 days horizon Nuveen High Yield is expected to generate 1.9 times more return on investment than Nuveen Short-duration. However, Nuveen High is 1.9 times more volatile than Nuveen Short Duration High. It trades about 0.17 of its potential returns per unit of risk. Nuveen Short Duration High is currently generating about 0.21 per unit of risk. If you would invest 1,287 in Nuveen High Yield on September 1, 2024 and sell it today you would earn a total of 227.00 from holding Nuveen High Yield or generate 17.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nuveen High Yield vs. Nuveen Short Duration High
Performance |
| Timeline |
| Nuveen High Yield |
| Nuveen Short Duration |
Nuveen High and Nuveen Short-duration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nuveen High and Nuveen Short-duration
The main advantage of trading using opposite Nuveen High and Nuveen Short-duration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nuveen High position performs unexpectedly, Nuveen Short-duration 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 Short-duration will offset losses from the drop in Nuveen Short-duration's long position.| Nuveen High vs. Oppenheimer Roc High | Nuveen High vs. Nuveen All American Municipal | Nuveen High vs. Nuveen High Yield | Nuveen High vs. Invesco High Yield |
| Nuveen Short-duration vs. Nuveen Small Cap | Nuveen Short-duration vs. Nuveen Real Estate | Nuveen Short-duration vs. Nuveen Real Estate | Nuveen Short-duration vs. Nuveen Preferred Securities |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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