Correlation Between Sparta Capital and Nuveen High

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

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

Diversification Opportunities for Sparta Capital and Nuveen High

-0.04

Correlation Coefficient

Sparta Capital  Nuveen High

Good diversification

The 3 months correlation between Sparta and Nuveen is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Sparta Capital and Nuveen High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen High Yield and Sparta Capital 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 Sparta Capital are associated (or correlated) with Nuveen High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen High Yield has no effect on the direction of Sparta Capital i.e., Sparta Capital and Nuveen High go up and down completely randomly.

Pair Corralation between Sparta Capital and Nuveen High

Assuming the 90 days horizon Sparta Capital is expected to under-perform the Nuveen High. In addition to that, Sparta Capital is 7.59 times more volatile than Nuveen High Yield. It trades about -0.13 of its total potential returns per unit of risk. Nuveen High Yield is currently generating about -0.03 per unit of volatility. If you would invest  1,523  in Nuveen High Yield on August 31, 2024 and sell it today you would lose (13.00) from holding Nuveen High Yield or give up 0.85% of portfolio value over 90 days.

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

Sparta Capital  vs.  Nuveen High Yield

Sparta Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sparta Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Nuveen High Yield

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Sparta Capital and Nuveen High

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

The idea behind Sparta Capital and Nuveen High Yield 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.

Check out your portfolio center.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.