Correlation Between Nuveen Preferred and Innovator

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

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

Diversification Opportunities for Nuveen Preferred and Innovator

0.75

Correlation Coefficient

Nuveen Preferred  Innovator

Poor diversification

The 3 months correlation between Nuveen and Innovator is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Preferred and and Innovator SP Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator SP Investment and Nuveen Preferred 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 Preferred and are associated (or correlated) with Innovator. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator SP Investment has no effect on the direction of Nuveen Preferred i.e., Nuveen Preferred and Innovator go up and down completely randomly.

Pair Corralation between Nuveen Preferred and Innovator

Given the investment horizon of 90 days Nuveen Preferred is expected to generate 1.63 times less return on investment than Innovator. But when comparing it to its historical volatility, Nuveen Preferred and is 4.11 times less risky than Innovator. It trades about 0.21 of its potential returns per unit of risk. Innovator SP Investment is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,647  in Innovator SP Investment on September 3, 2024 and sell it today you would earn a total of  287.00  from holding Innovator SP Investment or generate 17.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	60.65%
Values	Daily Returns

Nuveen Preferred and  vs.  Innovator SP Investment

Nuveen Preferred

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Preferred and are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical and fundamental indicators, Nuveen Preferred is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Innovator SP Investment

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Innovator SP Investment are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Innovator is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Nuveen Preferred and Innovator

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

The idea behind Nuveen Preferred and and Innovator SP Investment 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..