Correlation Between Vanguard Mega and Nuveen Winslow

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

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

Diversification Opportunities for Vanguard Mega and Nuveen Winslow

1.0

Correlation Coefficient

Vanguard Mega  Nuveen Winslow

No risk reduction

The 3 months correlation between Vanguard and Nuveen is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Mega Cap and Nuveen Winslow Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Winslow Large and Vanguard Mega 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 Vanguard Mega Cap are associated (or correlated) with Nuveen Winslow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Winslow Large has no effect on the direction of Vanguard Mega i.e., Vanguard Mega and Nuveen Winslow go up and down completely randomly.

Pair Corralation between Vanguard Mega and Nuveen Winslow

Considering the 90-day investment horizon Vanguard Mega Cap is expected to generate 0.95 times more return on investment than Nuveen Winslow. However, Vanguard Mega Cap is 1.05 times less risky than Nuveen Winslow. It trades about 0.19 of its potential returns per unit of risk. Nuveen Winslow Large Cap is currently generating about 0.18 per unit of risk. If you would invest  30,433  in Vanguard Mega Cap on September 4, 2024 and sell it today you would earn a total of  3,912  from holding Vanguard Mega Cap or generate 12.85% return on investment over 90 days.

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

Vanguard Mega Cap  vs.  Nuveen Winslow Large Cap

Vanguard Mega Cap

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Mega Cap are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite abnormal technical and fundamental indicators, Vanguard Mega may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Nuveen Winslow Large

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Winslow Large Cap are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, Nuveen Winslow may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Vanguard Mega and Nuveen Winslow

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

The idea behind Vanguard Mega Cap and Nuveen Winslow Large Cap 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.