Correlation Between Visa and Nuveen Preferred
Can any of the company-specific risk be diversified away by investing in both Visa and Nuveen Preferred 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 Visa and Nuveen Preferred into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Visa Class A and Nuveen Preferred Securities, you can compare the effects of market volatilities on Visa and Nuveen Preferred 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 Visa with a short position of Nuveen Preferred. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Nuveen Preferred.
Diversification Opportunities for Visa and Nuveen Preferred
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Visa and Nuveen is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Nuveen Preferred Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Preferred Sec and Visa 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 Visa Class A are associated (or correlated) with Nuveen Preferred. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Preferred Sec has no effect on the direction of Visa i.e., Visa and Nuveen Preferred go up and down completely randomly.
Pair Corralation between Visa and Nuveen Preferred
Taking into account the 90-day investment horizon Visa Class A is expected to generate 8.19 times more return on investment than Nuveen Preferred. However, Visa is 8.19 times more volatile than Nuveen Preferred Securities. It trades about 0.27 of its potential returns per unit of risk. Nuveen Preferred Securities is currently generating about -0.13 per unit of risk. If you would invest 27,442 in Visa Class A on August 29, 2024 and sell it today you would earn a total of 3,740 from holding Visa Class A or generate 13.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Nuveen Preferred Securities
Performance |
| Timeline |
| Visa Class A |
| Nuveen Preferred Sec |
Visa and Nuveen Preferred Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Nuveen Preferred
The main advantage of trading using opposite Visa and Nuveen Preferred positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Nuveen Preferred 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 Preferred will offset losses from the drop in Nuveen Preferred's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Nuveen Preferred vs. Metropolitan West High | Nuveen Preferred vs. Victory High Income | Nuveen Preferred vs. Pace High Yield | Nuveen Preferred vs. Strategic Allocation Aggressive |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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