Correlation Between Tortoise Energy and Nuveen California

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

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

Diversification Opportunities for Tortoise Energy and Nuveen California

-0.56

Correlation Coefficient

Tortoise Energy  Nuveen California

Excellent diversification

The 3 months correlation between Tortoise and Nuveen is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Tortoise Energy Independence and Nuveen California Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen California and Tortoise Energy 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 Tortoise Energy Independence 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 Tortoise Energy i.e., Tortoise Energy and Nuveen California go up and down completely randomly.

Pair Corralation between Tortoise Energy and Nuveen California

Considering the 90-day investment horizon Tortoise Energy Independence is expected to generate 2.4 times more return on investment than Nuveen California. However, Tortoise Energy is 2.4 times more volatile than Nuveen California Dividend. It trades about 0.22 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  3,724  in Tortoise Energy Independence on September 3, 2024 and sell it today you would earn a total of  686.00  from holding Tortoise Energy Independence or generate 18.42% return on investment over 90 days.

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

Tortoise Energy Independence  vs.  Nuveen California Dividend

Tortoise Energy Inde

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tortoise Energy Independence are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. Even with relatively fragile fundamental indicators, Tortoise Energy reported solid returns over the last few months and may actually be approaching a breakup point.

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 Tortoise Energy and Nuveen California

The main advantage of trading using opposite Tortoise Energy and Nuveen California positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tortoise Energy 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 Tortoise Energy Independence 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.