Correlation Between Global Core and Nuveen California

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

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

Diversification Opportunities for Global Core and Nuveen California

-0.56

Correlation Coefficient

Global Core  Nuveen California

Excellent diversification

The 3 months correlation between Global and Nuveen is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Global E Portfolio and Nuveen California Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen California and Global Core 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 E Portfolio are associated (or correlated) with Nuveen California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen California has no effect on the direction of Global Core i.e., Global Core and Nuveen California go up and down completely randomly.

Pair Corralation between Global Core and Nuveen California

Assuming the 90 days horizon Global E Portfolio is expected to generate 1.48 times more return on investment than Nuveen California. However, Global Core is 1.48 times more volatile than Nuveen California Dividend. It trades about 0.17 of its potential returns per unit of risk. Nuveen California Dividend is currently generating about 0.01 per unit of risk. If you would invest  1,987  in Global E Portfolio on September 3, 2024 and sell it today you would earn a total of  167.00  from holding Global E Portfolio or generate 8.4% return on investment over 90 days.

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

Global E Portfolio  vs.  Nuveen California Dividend

Global E Portfolio

Risk-Adjusted Performance

13 of 100

Good

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

Nuveen California

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nuveen California Dividend has generated negative risk-adjusted returns adding no value to fund investors. In spite of rather sound basic indicators, Nuveen California is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Global Core and Nuveen California

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

The idea behind Global E Portfolio and Nuveen California Dividend 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.