Correlation Between Redwood Alphafactor and Nuveen Real

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

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

Diversification Opportunities for Redwood Alphafactor and Nuveen Real

-0.08

Correlation Coefficient

Redwood Alphafactor  Nuveen Real

Good diversification

The 3 months correlation between Redwood and Nuveen is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Redwood Alphafactor Tactical 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 Redwood Alphafactor 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 Redwood Alphafactor Tactical 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 Redwood Alphafactor i.e., Redwood Alphafactor and Nuveen Real go up and down completely randomly.

Pair Corralation between Redwood Alphafactor and Nuveen Real

Assuming the 90 days horizon Redwood Alphafactor Tactical is expected to under-perform the Nuveen Real. In addition to that, Redwood Alphafactor is 1.14 times more volatile than Nuveen Real Asset. It trades about -0.03 of its total potential returns per unit of risk. Nuveen Real Asset is currently generating about 0.17 per unit of volatility. If you would invest  1,264  in Nuveen Real Asset on September 2, 2024 and sell it today you would earn a total of  97.00  from holding Nuveen Real Asset or generate 7.67% return on investment over 90 days.

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

Redwood Alphafactor Tactical  vs.  Nuveen Real Asset

Redwood Alphafactor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Redwood Alphafactor Tactical has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Redwood Alphafactor 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

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Real Asset are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. Despite fairly uncertain basic indicators, Nuveen Real may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Redwood Alphafactor and Nuveen Real

The main advantage of trading using opposite Redwood Alphafactor and Nuveen Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Redwood Alphafactor 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 Redwood Alphafactor Tactical 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.