Correlation Between Nuveen NASDAQ and Nuveen SP

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Can any of the company-specific risk be diversified away by investing in both Nuveen NASDAQ and Nuveen SP 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 NASDAQ and Nuveen SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nuveen NASDAQ 100 and Nuveen SP 500, you can compare the effects of market volatilities on Nuveen NASDAQ and Nuveen SP 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 NASDAQ with a short position of Nuveen SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen NASDAQ and Nuveen SP.

Diversification Opportunities for Nuveen NASDAQ and Nuveen SP

0.95
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Nuveen and Nuveen is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen NASDAQ 100 and Nuveen SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen SP 500 and Nuveen NASDAQ 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 NASDAQ 100 are associated (or correlated) with Nuveen SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen SP 500 has no effect on the direction of Nuveen NASDAQ i.e., Nuveen NASDAQ and Nuveen SP go up and down completely randomly.

Pair Corralation between Nuveen NASDAQ and Nuveen SP

Given the investment horizon of 90 days Nuveen NASDAQ 100 is expected to generate 1.57 times more return on investment than Nuveen SP. However, Nuveen NASDAQ is 1.57 times more volatile than Nuveen SP 500. It trades about 0.15 of its potential returns per unit of risk. Nuveen SP 500 is currently generating about 0.14 per unit of risk. If you would invest  2,544  in Nuveen NASDAQ 100 on August 29, 2024 and sell it today you would earn a total of  72.00  from holding Nuveen NASDAQ 100 or generate 2.83% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Nuveen NASDAQ 100  vs.  Nuveen SP 500

 Performance 
       Timeline  
Nuveen NASDAQ 100 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen NASDAQ 100 are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Nuveen NASDAQ may actually be approaching a critical reversion point that can send shares even higher in December 2024.
Nuveen SP 500 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen SP 500 are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong primary indicators, Nuveen SP is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Nuveen NASDAQ and Nuveen SP Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Nuveen NASDAQ and Nuveen SP

The main advantage of trading using opposite Nuveen NASDAQ and Nuveen SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nuveen NASDAQ position performs unexpectedly, Nuveen SP 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 SP will offset losses from the drop in Nuveen SP's long position.
The idea behind Nuveen NASDAQ 100 and Nuveen SP 500 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.

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