Correlation Between Nuveen New and Wells Fargo

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

By analyzing existing cross correlation between Nuveen New Jersey and Wells Fargo Growth, you can compare the effects of market volatilities on Nuveen New and Wells Fargo 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 Nuveen New with a short position of Wells Fargo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen New and Wells Fargo.

Diversification Opportunities for Nuveen New and Wells Fargo

-0.64

Correlation Coefficient

Nuveen New  Wells Fargo

Excellent diversification

The 3 months correlation between Nuveen and Wells is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen New Jersey and Wells Fargo Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wells Fargo Growth and Nuveen New 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 Nuveen New Jersey are associated (or correlated) with Wells Fargo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wells Fargo Growth has no effect on the direction of Nuveen New i.e., Nuveen New and Wells Fargo go up and down completely randomly.

Pair Corralation between Nuveen New and Wells Fargo

Assuming the 90 days horizon Nuveen New Jersey is expected to under-perform the Wells Fargo. But the mutual fund apears to be less risky and, when comparing its historical volatility, Nuveen New Jersey is 2.28 times less risky than Wells Fargo. The mutual fund trades about -0.02 of its potential returns per unit of risk. The Wells Fargo Growth is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  4,876  in Wells Fargo Growth on September 3, 2024 and sell it today you would earn a total of  658.00  from holding Wells Fargo Growth or generate 13.49% return on investment over 90 days.

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

Nuveen New Jersey  vs.  Wells Fargo Growth

Nuveen New Jersey

Risk-Adjusted Performance

0 of 100

Very Weak

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

Wells Fargo Growth

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Wells Fargo Growth are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical indicators, Wells Fargo showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nuveen New and Wells Fargo

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

The idea behind Nuveen New Jersey and Wells Fargo Growth 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.