Correlation Between Global X and Nuveen Preferred

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

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

Diversification Opportunities for Global X and Nuveen Preferred

0.61

Correlation Coefficient

Global X  Nuveen Preferred

Poor diversification

The 3 months correlation between Global and Nuveen is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Global X Preferred and Nuveen Preferred and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Preferred and Global X 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 Global X Preferred are associated (or correlated) with Nuveen Preferred. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Preferred has no effect on the direction of Global X i.e., Global X and Nuveen Preferred go up and down completely randomly.

Pair Corralation between Global X and Nuveen Preferred

Given the investment horizon of 90 days Global X Preferred is expected to generate 3.24 times more return on investment than Nuveen Preferred. However, Global X is 3.24 times more volatile than Nuveen Preferred and. It trades about 0.07 of its potential returns per unit of risk. Nuveen Preferred and is currently generating about 0.14 per unit of risk. If you would invest  1,996  in Global X Preferred on August 30, 2024 and sell it today you would earn a total of  43.00  from holding Global X Preferred or generate 2.15% return on investment over 90 days.

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

Global X Preferred  vs.  Nuveen Preferred and

Global X Preferred

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Preferred are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Global X is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Nuveen Preferred

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Preferred and are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical and fundamental indicators, Nuveen Preferred is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Global X and Nuveen Preferred

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

The idea behind Global X Preferred and Nuveen Preferred and 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.