Correlation Between Global Diversified and Nuveen Real

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

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

Diversification Opportunities for Global Diversified and Nuveen Real

0.84

Correlation Coefficient

Global Diversified  Nuveen Real

Very poor diversification

The 3 months correlation between Global and Nuveen is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Global Diversified Income and Nuveen Real Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Real Asset and Global Diversified 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 Diversified Income are associated (or correlated) with Nuveen Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Real Asset has no effect on the direction of Global Diversified i.e., Global Diversified and Nuveen Real go up and down completely randomly.

Pair Corralation between Global Diversified and Nuveen Real

Assuming the 90 days horizon Global Diversified Income is expected to generate 0.65 times more return on investment than Nuveen Real. However, Global Diversified Income is 1.53 times less risky than Nuveen Real. It trades about 0.1 of its potential returns per unit of risk. Nuveen Real Asset is currently generating about 0.03 per unit of risk. If you would invest  1,191  in Global Diversified Income on September 13, 2024 and sell it today you would earn a total of  5.00  from holding Global Diversified Income or generate 0.42% return on investment over 90 days.

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

Global Diversified Income  vs.  Nuveen Real Asset

Global Diversified Income

Risk-Adjusted Performance

0 of 100

Very Weak

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

Nuveen Real Asset

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Global Diversified and Nuveen Real

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

The idea behind Global Diversified Income and Nuveen Real Asset 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.