Correlation Between Nuveen Preferred and Columbia Global

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

By analyzing existing cross correlation between Nuveen Preferred Securities and Columbia Global Technology, you can compare the effects of market volatilities on Nuveen Preferred and Columbia Global 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 Columbia Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen Preferred and Columbia Global.

Diversification Opportunities for Nuveen Preferred and Columbia Global

0.58

Correlation Coefficient

Nuveen Preferred  Columbia Global

Very weak diversification

The 3 months correlation between Nuveen and Columbia is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Preferred Securities and Columbia Global Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Global Tech 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 Securities are associated (or correlated) with Columbia Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Global Tech has no effect on the direction of Nuveen Preferred i.e., Nuveen Preferred and Columbia Global go up and down completely randomly.

Pair Corralation between Nuveen Preferred and Columbia Global

Assuming the 90 days horizon Nuveen Preferred is expected to generate 9.54 times less return on investment than Columbia Global. But when comparing it to its historical volatility, Nuveen Preferred Securities is 7.09 times less risky than Columbia Global. It trades about 0.13 of its potential returns per unit of risk. Columbia Global Technology is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  8,391  in Columbia Global Technology on September 5, 2024 and sell it today you would earn a total of  1,195  from holding Columbia Global Technology or generate 14.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Nuveen Preferred Securities  vs.  Columbia Global Technology

Nuveen Preferred Sec

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Preferred Securities are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Nuveen Preferred is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Columbia Global Tech

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Global Technology are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Columbia Global showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nuveen Preferred and Columbia Global

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

The idea behind Nuveen Preferred Securities and Columbia Global Technology 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.