Correlation Between International Business and Nuveen Floating

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

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

Diversification Opportunities for International Business and Nuveen Floating

-0.38

Correlation Coefficient

International Business  Nuveen Floating

Very good diversification

The 3 months correlation between International and Nuveen is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding International Business Machine and Nuveen Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Floating Rate and International Business 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 International Business Machines are associated (or correlated) with Nuveen Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Floating Rate has no effect on the direction of International Business i.e., International Business and Nuveen Floating go up and down completely randomly.

Pair Corralation between International Business and Nuveen Floating

If you would invest  20,252  in International Business Machines on September 4, 2024 and sell it today you would earn a total of  2,487  from holding International Business Machines or generate 12.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

International Business Machine  vs.  Nuveen Floating Rate

International Business

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in International Business Machines are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental drivers, International Business may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Nuveen Floating Rate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nuveen Floating Rate has generated negative risk-adjusted returns adding no value to fund investors. In spite of very healthy basic indicators, Nuveen Floating is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with International Business and Nuveen Floating

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

The idea behind International Business Machines and Nuveen Floating Rate 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.