Correlation Between Nuveen New and North Star

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

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

Diversification Opportunities for Nuveen New and North Star

-0.36

Correlation Coefficient

Nuveen New  North Star

Very good diversification

The 3 months correlation between Nuveen and North is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen New Jersey and North Star Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North Star Dividend and Nuveen New 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 New Jersey are associated (or correlated) with North Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North Star Dividend has no effect on the direction of Nuveen New i.e., Nuveen New and North Star go up and down completely randomly.

Pair Corralation between Nuveen New and North Star

Considering the 90-day investment horizon Nuveen New Jersey is expected to under-perform the North Star. But the fund apears to be less risky and, when comparing its historical volatility, Nuveen New Jersey is 1.84 times less risky than North Star. The fund trades about -0.16 of its potential returns per unit of risk. The North Star Dividend is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  2,263  in North Star Dividend on September 21, 2024 and sell it today you would lose (32.00) from holding North Star Dividend or give up 1.41% of portfolio value over 90 days.

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

Nuveen New Jersey  vs.  North Star Dividend

Nuveen New Jersey

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nuveen New Jersey has generated negative risk-adjusted returns adding no value to fund investors. Even with relatively steady basic indicators, Nuveen New is not utilizing all of its potentials. The current stock price chaos, may contribute to medium-term losses for the stakeholders.

North Star Dividend

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days North Star Dividend has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, North Star is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nuveen New and North Star

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

The idea behind Nuveen New Jersey and North Star 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..