Correlation Between Nasdaq and Nuveen Dividend

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

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

Diversification Opportunities for Nasdaq and Nuveen Dividend

0.14

Correlation Coefficient

Nasdaq  Nuveen Dividend

Average diversification

The 3 months correlation between Nasdaq and Nuveen is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Nuveen Dividend Advantage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Dividend Advantage and Nasdaq 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 Nasdaq Inc are associated (or correlated) with Nuveen Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Dividend Advantage has no effect on the direction of Nasdaq i.e., Nasdaq and Nuveen Dividend go up and down completely randomly.

Pair Corralation between Nasdaq and Nuveen Dividend

Given the investment horizon of 90 days Nasdaq is expected to generate 1.65 times less return on investment than Nuveen Dividend. In addition to that, Nasdaq is 2.51 times more volatile than Nuveen Dividend Advantage. It trades about 0.06 of its total potential returns per unit of risk. Nuveen Dividend Advantage is currently generating about 0.26 per unit of volatility. If you would invest  1,202  in Nuveen Dividend Advantage on September 12, 2024 and sell it today you would earn a total of  26.00  from holding Nuveen Dividend Advantage or generate 2.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Nasdaq Inc  vs.  Nuveen Dividend Advantage

Nasdaq Inc

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Nasdaq may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Nuveen Dividend Advantage

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Dividend Advantage are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather sound basic indicators, Nuveen Dividend is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Nasdaq and Nuveen Dividend

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

The idea behind Nasdaq Inc and Nuveen Dividend Advantage 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.