Correlation Between Nuveen SP and Western Asset
Can any of the company-specific risk be diversified away by investing in both Nuveen SP 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 SP 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 SP 500 and Western Asset High, you can compare the effects of market volatilities on Nuveen SP 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 SP with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen SP and Western Asset.
Diversification Opportunities for Nuveen SP and Western Asset
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Nuveen and Western is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen SP 500 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 SP 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 SP 500 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 SP i.e., Nuveen SP and Western Asset go up and down completely randomly.
Pair Corralation between Nuveen SP and Western Asset
Given the investment horizon of 90 days Nuveen SP 500 is expected to generate 1.09 times more return on investment than Western Asset. However, Nuveen SP is 1.09 times more volatile than Western Asset High. It trades about 0.07 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 1,417 in Nuveen SP 500 on September 12, 2024 and sell it today you would earn a total of 376.00 from holding Nuveen SP 500 or generate 26.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nuveen SP 500 vs. Western Asset High
Performance |
| Timeline |
| Nuveen SP 500 |
| Western Asset High |
Nuveen SP and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nuveen SP and Western Asset
The main advantage of trading using opposite Nuveen SP and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nuveen SP 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 SP vs. Nuveen SP 500 | Nuveen SP vs. Voya Global Equity | Nuveen SP vs. Nuveen NASDAQ 100 | Nuveen SP vs. Nuveen Real Asset |
| 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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