Correlation Between Aquagold International and Nuveen California

Can any of the company-specific risk be diversified away by investing in both Aquagold International and Nuveen California 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 Aquagold International and Nuveen California into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aquagold International and Nuveen California Select, you can compare the effects of market volatilities on Aquagold International and Nuveen California 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 Aquagold International with a short position of Nuveen California. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aquagold International and Nuveen California.

Diversification Opportunities for Aquagold International and Nuveen California

0.17

Correlation Coefficient

Aquagold International  Nuveen California

Average diversification

The 3 months correlation between Aquagold and Nuveen is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Aquagold International and Nuveen California Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen California Select and Aquagold International 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 Aquagold International are associated (or correlated) with Nuveen California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen California Select has no effect on the direction of Aquagold International i.e., Aquagold International and Nuveen California go up and down completely randomly.

Pair Corralation between Aquagold International and Nuveen California

Given the investment horizon of 90 days Aquagold International is expected to generate 52.76 times more return on investment than Nuveen California. However, Aquagold International is 52.76 times more volatile than Nuveen California Select. It trades about 0.05 of its potential returns per unit of risk. Nuveen California Select is currently generating about 0.01 per unit of risk. If you would invest  17.00  in Aquagold International on September 25, 2024 and sell it today you would lose (16.96) from holding Aquagold International or give up 99.76% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Aquagold International  vs.  Nuveen California Select

Aquagold International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aquagold International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Nuveen California Select

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nuveen California Select has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Nuveen California is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Aquagold International and Nuveen California

The main advantage of trading using opposite Aquagold International and Nuveen California positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aquagold International position performs unexpectedly, Nuveen California 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 California will offset losses from the drop in Nuveen California's long position.

The idea behind Aquagold International and Nuveen California Select pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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.