Correlation Between Nuveen California and Aquagold International

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

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

Diversification Opportunities for Nuveen California and Aquagold International

0.24

Correlation Coefficient

Nuveen California  Aquagold International

Modest diversification

The 3 months correlation between Nuveen and Aquagold is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen California Select and Aquagold International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aquagold International and Nuveen California 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 California Select are associated (or correlated) with Aquagold International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aquagold International has no effect on the direction of Nuveen California i.e., Nuveen California and Aquagold International go up and down completely randomly.

Pair Corralation between Nuveen California and Aquagold International

Considering the 90-day investment horizon Nuveen California Select is expected to generate 0.04 times more return on investment than Aquagold International. However, Nuveen California Select is 26.27 times less risky than Aquagold International. It trades about -0.12 of its potential returns per unit of risk. Aquagold International is currently generating about -0.22 per unit of risk. If you would invest  1,336  in Nuveen California Select on September 27, 2024 and sell it today you would lose (27.00) from holding Nuveen California Select or give up 2.02% of portfolio value over 90 days.

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

Nuveen California Select  vs.  Aquagold International

Nuveen California Select

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nuveen California Select has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Aquagold International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aquagold International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Nuveen California and Aquagold International

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

The idea behind Nuveen California Select and Aquagold International 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.