Correlation Between Xtrackers Short and Nuveen ESG

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

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

Diversification Opportunities for Xtrackers Short and Nuveen ESG

-0.41

Correlation Coefficient

Xtrackers Short  Nuveen ESG

Very good diversification

The 3 months correlation between Xtrackers and Nuveen is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers Short Duration and Nuveen ESG Aggregate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen ESG Aggregate and Xtrackers Short 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 Xtrackers Short Duration are associated (or correlated) with Nuveen ESG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen ESG Aggregate has no effect on the direction of Xtrackers Short i.e., Xtrackers Short and Nuveen ESG go up and down completely randomly.

Pair Corralation between Xtrackers Short and Nuveen ESG

Given the investment horizon of 90 days Xtrackers Short Duration is expected to generate 0.65 times more return on investment than Nuveen ESG. However, Xtrackers Short Duration is 1.54 times less risky than Nuveen ESG. It trades about 0.18 of its potential returns per unit of risk. Nuveen ESG Aggregate is currently generating about 0.04 per unit of risk. If you would invest  4,123  in Xtrackers Short Duration on September 12, 2024 and sell it today you would earn a total of  405.00  from holding Xtrackers Short Duration or generate 9.82% return on investment over 90 days.

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

Xtrackers Short Duration  vs.  Nuveen ESG Aggregate

Xtrackers Short Duration

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Xtrackers Short Duration are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Xtrackers Short is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Nuveen ESG Aggregate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nuveen ESG Aggregate has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, Nuveen ESG is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Xtrackers Short and Nuveen ESG

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

The idea behind Xtrackers Short Duration and Nuveen ESG Aggregate 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 CEOs Directory module to screen CEOs from public companies around the world.