Correlation Between Nuveen Real and Westwood Largecap

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

By analyzing existing cross correlation between Nuveen Real Asset and Westwood Largecap Value, you can compare the effects of market volatilities on Nuveen Real and Westwood Largecap 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 Real with a short position of Westwood Largecap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen Real and Westwood Largecap.

Diversification Opportunities for Nuveen Real and Westwood Largecap

0.65

Correlation Coefficient

Nuveen Real  Westwood Largecap

Poor diversification

The 3 months correlation between Nuveen and Westwood is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Real Asset and Westwood Largecap Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westwood Largecap Value and Nuveen Real 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 Real Asset are associated (or correlated) with Westwood Largecap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westwood Largecap Value has no effect on the direction of Nuveen Real i.e., Nuveen Real and Westwood Largecap go up and down completely randomly.

Pair Corralation between Nuveen Real and Westwood Largecap

Considering the 90-day investment horizon Nuveen Real Asset is expected to generate 0.98 times more return on investment than Westwood Largecap. However, Nuveen Real Asset is 1.02 times less risky than Westwood Largecap. It trades about 0.17 of its potential returns per unit of risk. Westwood Largecap Value is currently generating about 0.13 per unit of risk. If you would invest  1,264  in Nuveen Real Asset on September 2, 2024 and sell it today you would earn a total of  97.00  from holding Nuveen Real Asset or generate 7.67% return on investment over 90 days.

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

Nuveen Real Asset  vs.  Westwood Largecap Value

Nuveen Real Asset

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Real Asset are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. Despite fairly uncertain basic indicators, Nuveen Real may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Westwood Largecap Value

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Westwood Largecap Value are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Westwood Largecap 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 Real and Westwood Largecap

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

The idea behind Nuveen Real Asset and Westwood Largecap Value 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.