Correlation Between Visa and Nuveen Variable

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

By analyzing existing cross correlation between Visa Class A and Nuveen Variable Rate, you can compare the effects of market volatilities on Visa and Nuveen Variable 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 Visa with a short position of Nuveen Variable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Nuveen Variable.

Diversification Opportunities for Visa and Nuveen Variable

0.62

Correlation Coefficient

Visa  Nuveen Variable

Poor diversification

The 3 months correlation between Visa and Nuveen is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Nuveen Variable Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Variable Rate and Visa 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 Visa Class A are associated (or correlated) with Nuveen Variable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Variable Rate has no effect on the direction of Visa i.e., Visa and Nuveen Variable go up and down completely randomly.

Pair Corralation between Visa and Nuveen Variable

Taking into account the 90-day investment horizon Visa is expected to generate 1.13 times less return on investment than Nuveen Variable. In addition to that, Visa is 1.62 times more volatile than Nuveen Variable Rate. It trades about 0.08 of its total potential returns per unit of risk. Nuveen Variable Rate is currently generating about 0.15 per unit of volatility. If you would invest  1,502  in Nuveen Variable Rate on September 14, 2024 and sell it today you would earn a total of  399.00  from holding Nuveen Variable Rate or generate 26.56% return on investment over 90 days.

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

Visa Class A  vs.  Nuveen Variable Rate

Visa Class A

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Visa may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Nuveen Variable Rate

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Variable Rate are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Nuveen Variable is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Visa and Nuveen Variable

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

The idea behind Visa Class A and Nuveen Variable Rate 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..