Correlation Between Nuveen Mid and Nuveen High

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

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

Diversification Opportunities for Nuveen Mid and Nuveen High

0.83

Correlation Coefficient

Nuveen Mid  Nuveen High

Very poor diversification

The 3 months correlation between Nuveen and Nuveen is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Mid Cap and Nuveen High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen High Income and Nuveen Mid 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 Mid Cap are associated (or correlated) with Nuveen High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen High Income has no effect on the direction of Nuveen Mid i.e., Nuveen Mid and Nuveen High go up and down completely randomly.

Pair Corralation between Nuveen Mid and Nuveen High

Assuming the 90 days horizon Nuveen Mid Cap is expected to generate 4.46 times more return on investment than Nuveen High. However, Nuveen Mid is 4.46 times more volatile than Nuveen High Income. It trades about 0.12 of its potential returns per unit of risk. Nuveen High Income is currently generating about 0.24 per unit of risk. If you would invest  5,642  in Nuveen Mid Cap on September 12, 2024 and sell it today you would earn a total of  382.00  from holding Nuveen Mid Cap or generate 6.77% return on investment over 90 days.

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

Nuveen Mid Cap  vs.  Nuveen High Income

Nuveen Mid Cap

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Mid Cap are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Nuveen Mid may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Nuveen High Income

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen High Income are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Nuveen High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nuveen Mid and Nuveen High

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

The idea behind Nuveen Mid Cap and Nuveen High Income 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.