Correlation Between Van Eck and Nuveen NASDAQ

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

By analyzing existing cross correlation between Van Eck and Nuveen NASDAQ 100, you can compare the effects of market volatilities on Van Eck and Nuveen NASDAQ 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 Van Eck with a short position of Nuveen NASDAQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Van Eck and Nuveen NASDAQ.

Diversification Opportunities for Van Eck and Nuveen NASDAQ

0.85

Correlation Coefficient

Van Eck  Nuveen NASDAQ

Very poor diversification

The 3 months correlation between Van and Nuveen is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Van Eck and Nuveen NASDAQ 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen NASDAQ 100 and Van Eck 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 Van Eck are associated (or correlated) with Nuveen NASDAQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen NASDAQ 100 has no effect on the direction of Van Eck i.e., Van Eck and Nuveen NASDAQ go up and down completely randomly.

Pair Corralation between Van Eck and Nuveen NASDAQ

Considering the 90-day investment horizon Van Eck is expected to generate 2.04 times less return on investment than Nuveen NASDAQ. But when comparing it to its historical volatility, Van Eck is 2.15 times less risky than Nuveen NASDAQ. It trades about 0.08 of its potential returns per unit of risk. Nuveen NASDAQ 100 is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,817  in Nuveen NASDAQ 100 on September 22, 2024 and sell it today you would earn a total of  824.00  from holding Nuveen NASDAQ 100 or generate 45.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	90.14%
Values	Daily Returns

Van Eck  vs.  Nuveen NASDAQ 100

Van Eck

Risk-Adjusted Performance

0 of 100

Weak

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

Nuveen NASDAQ 100

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen NASDAQ 100 are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Nuveen NASDAQ may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Van Eck and Nuveen NASDAQ

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

The idea behind Van Eck and Nuveen NASDAQ 100 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.

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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.