Correlation Between Nuveen NASDAQ and Eaton Vance

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

By analyzing existing cross correlation between Nuveen NASDAQ 100 and Eaton Vance Tax, you can compare the effects of market volatilities on Nuveen NASDAQ and Eaton Vance 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 NASDAQ with a short position of Eaton Vance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen NASDAQ and Eaton Vance.

Diversification Opportunities for Nuveen NASDAQ and Eaton Vance

0.95

Correlation Coefficient

Nuveen NASDAQ  Eaton Vance

Almost no diversification

The 3 months correlation between Nuveen and Eaton is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen NASDAQ 100 and Eaton Vance Tax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance Tax and Nuveen NASDAQ 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 NASDAQ 100 are associated (or correlated) with Eaton Vance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eaton Vance Tax has no effect on the direction of Nuveen NASDAQ i.e., Nuveen NASDAQ and Eaton Vance go up and down completely randomly.

Pair Corralation between Nuveen NASDAQ and Eaton Vance

Given the investment horizon of 90 days Nuveen NASDAQ 100 is expected to generate 1.55 times more return on investment than Eaton Vance. However, Nuveen NASDAQ is 1.55 times more volatile than Eaton Vance Tax. It trades about 0.19 of its potential returns per unit of risk. Eaton Vance Tax is currently generating about 0.22 per unit of risk. If you would invest  2,443  in Nuveen NASDAQ 100 on September 25, 2024 and sell it today you would earn a total of  243.00  from holding Nuveen NASDAQ 100 or generate 9.95% return on investment over 90 days.

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

Nuveen NASDAQ 100  vs.  Eaton Vance Tax

Nuveen NASDAQ 100

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen NASDAQ 100 are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Nuveen NASDAQ may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Eaton Vance Tax

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Eaton Vance Tax are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal basic indicators, Eaton Vance may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Nuveen NASDAQ and Eaton Vance

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

The idea behind Nuveen NASDAQ 100 and Eaton Vance Tax 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.