Correlation Between Nuveen New and European Equity

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

By analyzing existing cross correlation between Nuveen New York and European Equity Closed, you can compare the effects of market volatilities on Nuveen New and European Equity 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 European Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen New and European Equity.

Diversification Opportunities for Nuveen New and European Equity

0.51

Correlation Coefficient

Nuveen New  European Equity

Very weak diversification

The 3 months correlation between Nuveen and European is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen New York and European Equity Closed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on European Equity Closed 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 York are associated (or correlated) with European Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of European Equity Closed has no effect on the direction of Nuveen New i.e., Nuveen New and European Equity go up and down completely randomly.

Pair Corralation between Nuveen New and European Equity

Considering the 90-day investment horizon Nuveen New York is expected to generate 0.49 times more return on investment than European Equity. However, Nuveen New York is 2.04 times less risky than European Equity. It trades about 0.01 of its potential returns per unit of risk. European Equity Closed is currently generating about -0.14 per unit of risk. If you would invest  1,193  in Nuveen New York on September 5, 2024 and sell it today you would earn a total of  2.00  from holding Nuveen New York or generate 0.17% return on investment over 90 days.

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

Nuveen New York  vs.  European Equity Closed

Nuveen New York

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nuveen New York has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Nuveen New is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

European Equity Closed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days European Equity Closed has generated negative risk-adjusted returns adding no value to fund investors. Despite latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Nuveen New and European Equity

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

The idea behind Nuveen New York and European Equity Closed 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.