Correlation Between NYSE Composite and Nuveen Small
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Nuveen Small 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 NYSE Composite and Nuveen Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Nuveen Small Cap, you can compare the effects of market volatilities on NYSE Composite and Nuveen Small 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 NYSE Composite with a short position of Nuveen Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Nuveen Small.
Diversification Opportunities for NYSE Composite and Nuveen Small
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NYSE and Nuveen is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Nuveen Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Small Cap and NYSE Composite 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 NYSE Composite are associated (or correlated) with Nuveen Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Small Cap has no effect on the direction of NYSE Composite i.e., NYSE Composite and Nuveen Small go up and down completely randomly.
Pair Corralation between NYSE Composite and Nuveen Small
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.1 times less return on investment than Nuveen Small. But when comparing it to its historical volatility, NYSE Composite is 1.65 times less risky than Nuveen Small. It trades about 0.08 of its potential returns per unit of risk. Nuveen Small Cap is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,149 in Nuveen Small Cap on August 30, 2024 and sell it today you would earn a total of 706.00 from holding Nuveen Small Cap or generate 32.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Nuveen Small Cap
Performance |
| Timeline |
NYSE Composite and Nuveen Small Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Nuveen Small Cap
Pair trading matchups for Nuveen Small
Pair Trading with NYSE Composite and Nuveen Small
The main advantage of trading using opposite NYSE Composite and Nuveen Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Nuveen Small 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 Small will offset losses from the drop in Nuveen Small's long position.| NYSE Composite vs. Delek Drilling | NYSE Composite vs. Helmerich and Payne | NYSE Composite vs. Waste Management | NYSE Composite vs. US Global Investors |
| Nuveen Small vs. Nuveen Small Cap | Nuveen Small vs. Nuveen Small Cap | Nuveen Small vs. First American Investment | Nuveen Small vs. Nuveen Mid 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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