Correlation Between Nuveen Preferred and Nuveen Short
Can any of the company-specific risk be diversified away by investing in both Nuveen Preferred and Nuveen Short 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 Short 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 Short Term, you can compare the effects of market volatilities on Nuveen Preferred and Nuveen Short 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 Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen Preferred and Nuveen Short.
Diversification Opportunities for Nuveen Preferred and Nuveen Short
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nuveen and Nuveen is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Preferred Securities and Nuveen Short Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Short 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 Short. 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 Term has no effect on the direction of Nuveen Preferred i.e., Nuveen Preferred and Nuveen Short go up and down completely randomly.
Pair Corralation between Nuveen Preferred and Nuveen Short
Assuming the 90 days horizon Nuveen Preferred Securities is expected to generate 2.43 times more return on investment than Nuveen Short. However, Nuveen Preferred is 2.43 times more volatile than Nuveen Short Term. It trades about 0.1 of its potential returns per unit of risk. Nuveen Short Term is currently generating about 0.19 per unit of risk. If you would invest 1,562 in Nuveen Preferred Securities on August 30, 2024 and sell it today you would earn a total of 6.00 from holding Nuveen Preferred Securities or generate 0.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nuveen Preferred Securities vs. Nuveen Short Term
Performance |
| Timeline |
| Nuveen Preferred Sec |
| Nuveen Short Term |
Nuveen Preferred and Nuveen Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nuveen Preferred and Nuveen Short
The main advantage of trading using opposite Nuveen Preferred and Nuveen Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nuveen Preferred position performs unexpectedly, Nuveen Short 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 will offset losses from the drop in Nuveen Short's long position.| Nuveen Preferred vs. Pimco Mortgage Opportunities | Nuveen Preferred vs. Cohen Steers Preferred | Nuveen Preferred vs. Jpmorgan Mortgage Backed Securities | Nuveen Preferred vs. Muzinich Low Duration |
| Nuveen Short vs. Tax Managed Large Cap | Nuveen Short vs. Enhanced Large Pany | Nuveen Short vs. Strategic Allocation Aggressive | Nuveen Short vs. Goldman Sachs Large |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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