Correlation Between Nuveen NASDAQ and Western Asset
Can any of the company-specific risk be diversified away by investing in both Nuveen NASDAQ and Western Asset 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 Western Asset 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 Western Asset High, you can compare the effects of market volatilities on Nuveen NASDAQ and Western Asset 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 Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen NASDAQ and Western Asset.
Diversification Opportunities for Nuveen NASDAQ and Western Asset
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nuveen and Western is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen NASDAQ 100 and Western Asset High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset High 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 Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset High has no effect on the direction of Nuveen NASDAQ i.e., Nuveen NASDAQ and Western Asset go up and down completely randomly.
Pair Corralation between Nuveen NASDAQ and Western Asset
Given the investment horizon of 90 days Nuveen NASDAQ 100 is expected to generate 1.51 times more return on investment than Western Asset. However, Nuveen NASDAQ is 1.51 times more volatile than Western Asset High. It trades about 0.09 of its potential returns per unit of risk. Western Asset High is currently generating about 0.06 per unit of risk. If you would invest 1,815 in Nuveen NASDAQ 100 on September 12, 2024 and sell it today you would earn a total of 930.00 from holding Nuveen NASDAQ 100 or generate 51.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nuveen NASDAQ 100 vs. Western Asset High
Performance |
| Timeline |
| Nuveen NASDAQ 100 |
| Western Asset High |
Nuveen NASDAQ and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nuveen NASDAQ and Western Asset
The main advantage of trading using opposite Nuveen NASDAQ and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nuveen NASDAQ position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset's long position.| Nuveen NASDAQ vs. Brookfield Real Assets | Nuveen NASDAQ vs. Guggenheim Strategic Opportunities | Nuveen NASDAQ vs. Cornerstone Strategic Return | Nuveen NASDAQ vs. Cornerstone Strategic Value |
| Western Asset vs. Brookfield Real Assets | Western Asset vs. Guggenheim Strategic Opportunities | Western Asset vs. Cornerstone Strategic Return | Western Asset vs. Cornerstone Strategic Value |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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