Correlation Between Nuveen Nwq and First American

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

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

Diversification Opportunities for Nuveen Nwq and First American

0.93

Correlation Coefficient

Nuveen Nwq  First American

Almost no diversification

The 3 months correlation between Nuveen and First is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Nwq Large Cap and First American Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First American Investment and Nuveen Nwq 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 Nwq Large Cap are associated (or correlated) with First American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First American Investment has no effect on the direction of Nuveen Nwq i.e., Nuveen Nwq and First American go up and down completely randomly.

Pair Corralation between Nuveen Nwq and First American

Assuming the 90 days horizon Nuveen Nwq is expected to generate 1.35 times less return on investment than First American. But when comparing it to its historical volatility, Nuveen Nwq Large Cap is 1.78 times less risky than First American. It trades about 0.2 of its potential returns per unit of risk. First American Investment is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  3,174  in First American Investment on August 31, 2024 and sell it today you would earn a total of  411.00  from holding First American Investment or generate 12.95% return on investment over 90 days.

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

Nuveen Nwq Large Cap  vs.  First American Investment

Nuveen Nwq Large

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Nwq Large Cap are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Nuveen Nwq may actually be approaching a critical reversion point that can send shares even higher in December 2024.

First American Investment

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in First American Investment are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, First American showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nuveen Nwq and First American

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

The idea behind Nuveen Nwq Large Cap and First American 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.

Check out your portfolio center.

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 Anywhere module to track or share privately all of your investments from the convenience of any device.