Correlation Between American Funds and Nuveen Global
Can any of the company-specific risk be diversified away by investing in both American Funds and Nuveen Global 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 American Funds and Nuveen Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds 2050 and Nuveen Global Real, you can compare the effects of market volatilities on American Funds and Nuveen Global 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 American Funds with a short position of Nuveen Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Nuveen Global.
Diversification Opportunities for American Funds and Nuveen Global
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and Nuveen is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding American Funds 2050 and Nuveen Global Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Global Real and American Funds 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 American Funds 2050 are associated (or correlated) with Nuveen Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Global Real has no effect on the direction of American Funds i.e., American Funds and Nuveen Global go up and down completely randomly.
Pair Corralation between American Funds and Nuveen Global
Assuming the 90 days horizon American Funds 2050 is expected to generate 0.8 times more return on investment than Nuveen Global. However, American Funds 2050 is 1.24 times less risky than Nuveen Global. It trades about 0.09 of its potential returns per unit of risk. Nuveen Global Real is currently generating about 0.04 per unit of risk. If you would invest 2,149 in American Funds 2050 on August 31, 2024 and sell it today you would earn a total of 27.00 from holding American Funds 2050 or generate 1.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds 2050 vs. Nuveen Global Real
Performance |
| Timeline |
| American Funds 2050 |
| Nuveen Global Real |
American Funds and Nuveen Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Nuveen Global
The main advantage of trading using opposite American Funds and Nuveen Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Nuveen Global 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 Global will offset losses from the drop in Nuveen Global's long position.| American Funds vs. Applied Finance Explorer | American Funds vs. Columbia Small Cap | American Funds vs. Queens Road Small | American Funds vs. American Century Etf |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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