Correlation Between Nuveen Preferred and Nuveen Limited
Can any of the company-specific risk be diversified away by investing in both Nuveen Preferred and Nuveen Limited 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 Preferred and Nuveen Limited into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nuveen Preferred Securities and Nuveen Limited Term, you can compare the effects of market volatilities on Nuveen Preferred and Nuveen Limited 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 Preferred with a short position of Nuveen Limited. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen Preferred and Nuveen Limited.
Diversification Opportunities for Nuveen Preferred and Nuveen Limited
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nuveen and Nuveen is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Preferred Securities and Nuveen Limited Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Limited Term and Nuveen Preferred 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 Preferred Securities are associated (or correlated) with Nuveen Limited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Limited Term has no effect on the direction of Nuveen Preferred i.e., Nuveen Preferred and Nuveen Limited go up and down completely randomly.
Pair Corralation between Nuveen Preferred and Nuveen Limited
Assuming the 90 days horizon Nuveen Preferred is expected to generate 1.43 times less return on investment than Nuveen Limited. In addition to that, Nuveen Preferred is 1.1 times more volatile than Nuveen Limited Term. It trades about 0.13 of its total potential returns per unit of risk. Nuveen Limited Term is currently generating about 0.21 per unit of volatility. If you would invest 1,082 in Nuveen Limited Term on September 1, 2024 and sell it today you would earn a total of 9.00 from holding Nuveen Limited Term or generate 0.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nuveen Preferred Securities vs. Nuveen Limited Term
Performance |
| Timeline |
| Nuveen Preferred Sec |
| Nuveen Limited Term |
Nuveen Preferred and Nuveen Limited Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nuveen Preferred and Nuveen Limited
The main advantage of trading using opposite Nuveen Preferred and Nuveen Limited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nuveen Preferred position performs unexpectedly, Nuveen Limited 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 Limited will offset losses from the drop in Nuveen Limited's long position.| Nuveen Preferred vs. Nuveen Small Cap | Nuveen Preferred vs. Nuveen Real Estate | Nuveen Preferred vs. Nuveen Real Estate | Nuveen Preferred vs. Nuveen Preferred Securities |
| Nuveen Limited vs. Nuveen Small Cap | Nuveen Limited vs. Nuveen Real Estate | Nuveen Limited vs. Nuveen Real Estate | Nuveen Limited 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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