Correlation Between Target Retirement and Nuveen Minnesota
Can any of the company-specific risk be diversified away by investing in both Target Retirement and Nuveen Minnesota 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 Target Retirement and Nuveen Minnesota into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Target Retirement 2040 and Nuveen Minnesota Intermediate, you can compare the effects of market volatilities on Target Retirement and Nuveen Minnesota 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 Target Retirement with a short position of Nuveen Minnesota. Check out your portfolio center. Please also check ongoing floating volatility patterns of Target Retirement and Nuveen Minnesota.
Diversification Opportunities for Target Retirement and Nuveen Minnesota
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Target and Nuveen is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Target Retirement 2040 and Nuveen Minnesota Intermediate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Minnesota Int and Target Retirement 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 Target Retirement 2040 are associated (or correlated) with Nuveen Minnesota. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Minnesota Int has no effect on the direction of Target Retirement i.e., Target Retirement and Nuveen Minnesota go up and down completely randomly.
Pair Corralation between Target Retirement and Nuveen Minnesota
Assuming the 90 days horizon Target Retirement 2040 is expected to generate 3.46 times more return on investment than Nuveen Minnesota. However, Target Retirement is 3.46 times more volatile than Nuveen Minnesota Intermediate. It trades about 0.09 of its potential returns per unit of risk. Nuveen Minnesota Intermediate is currently generating about 0.07 per unit of risk. If you would invest 1,087 in Target Retirement 2040 on September 3, 2024 and sell it today you would earn a total of 304.00 from holding Target Retirement 2040 or generate 27.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Target Retirement 2040 vs. Nuveen Minnesota Intermediate
Performance |
| Timeline |
| Target Retirement 2040 |
| Nuveen Minnesota Int |
Target Retirement and Nuveen Minnesota Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Target Retirement and Nuveen Minnesota
The main advantage of trading using opposite Target Retirement and Nuveen Minnesota positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Target Retirement position performs unexpectedly, Nuveen Minnesota 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 Minnesota will offset losses from the drop in Nuveen Minnesota's long position.| Target Retirement vs. Barings Active Short | Target Retirement vs. Siit Ultra Short | Target Retirement vs. Astor Longshort Fund | Target Retirement vs. Goldman Sachs Short |
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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