Correlation Between Global Technology and Nuveen Louisiana

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

By analyzing existing cross correlation between Global Technology Portfolio and Nuveen Louisiana Municipal, you can compare the effects of market volatilities on Global Technology and Nuveen Louisiana 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 Global Technology with a short position of Nuveen Louisiana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Technology and Nuveen Louisiana.

Diversification Opportunities for Global Technology and Nuveen Louisiana

-0.71

Correlation Coefficient

Global Technology  Nuveen Louisiana

Pay attention - limited upside

The 3 months correlation between Global and Nuveen is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Global Technology Portfolio and Nuveen Louisiana Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Louisiana Mun and Global Technology 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 Global Technology Portfolio are associated (or correlated) with Nuveen Louisiana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Louisiana Mun has no effect on the direction of Global Technology i.e., Global Technology and Nuveen Louisiana go up and down completely randomly.

Pair Corralation between Global Technology and Nuveen Louisiana

Assuming the 90 days horizon Global Technology Portfolio is expected to generate 5.33 times more return on investment than Nuveen Louisiana. However, Global Technology is 5.33 times more volatile than Nuveen Louisiana Municipal. It trades about 0.11 of its potential returns per unit of risk. Nuveen Louisiana Municipal is currently generating about 0.05 per unit of risk. If you would invest  1,109  in Global Technology Portfolio on September 4, 2024 and sell it today you would earn a total of  1,030  from holding Global Technology Portfolio or generate 92.88% return on investment over 90 days.

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

Global Technology Portfolio  vs.  Nuveen Louisiana Municipal

Global Technology

Risk-Adjusted Performance

12 of 100

Good

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

Nuveen Louisiana Mun

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nuveen Louisiana Municipal has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong essential indicators, Nuveen Louisiana is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Global Technology and Nuveen Louisiana

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

The idea behind Global Technology Portfolio and Nuveen Louisiana Municipal 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 Anywhere module to track or share privately all of your investments from the convenience of any device.