Correlation Between Red Oak and Nuveen Short

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

By analyzing existing cross correlation between Red Oak Technology and Nuveen Short Duration High, you can compare the effects of market volatilities on Red Oak and Nuveen Short 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 Red Oak with a short position of Nuveen Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Oak and Nuveen Short.

Diversification Opportunities for Red Oak and Nuveen Short

-0.8

Correlation Coefficient

Red Oak  Nuveen Short

Pay attention - limited upside

The 3 months correlation between Red and Nuveen is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Red Oak Technology and Nuveen Short Duration High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Short Duration and Red Oak 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 Red Oak Technology are associated (or correlated) with Nuveen Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Short Duration has no effect on the direction of Red Oak i.e., Red Oak and Nuveen Short go up and down completely randomly.

Pair Corralation between Red Oak and Nuveen Short

Assuming the 90 days horizon Red Oak Technology is expected to generate 4.48 times more return on investment than Nuveen Short. However, Red Oak is 4.48 times more volatile than Nuveen Short Duration High. It trades about 0.13 of its potential returns per unit of risk. Nuveen Short Duration High is currently generating about -0.06 per unit of risk. If you would invest  4,533  in Red Oak Technology on September 4, 2024 and sell it today you would earn a total of  424.00  from holding Red Oak Technology or generate 9.35% return on investment over 90 days.

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

Red Oak Technology  vs.  Nuveen Short Duration High

Red Oak Technology

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Red Oak Technology are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Red Oak may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Nuveen Short Duration

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Red Oak and Nuveen Short

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

The idea behind Red Oak Technology and Nuveen Short Duration High 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.