Correlation Between Flow Capital and Nuveen Arizona

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

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

Diversification Opportunities for Flow Capital and Nuveen Arizona

-0.75

Correlation Coefficient

Flow Capital  Nuveen Arizona

Pay attention - limited upside

The 3 months correlation between Flow and Nuveen is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Flow Capital Corp and Nuveen Arizona Quality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Arizona Quality and Flow 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 Flow Capital Corp are associated (or correlated) with Nuveen Arizona. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Arizona Quality has no effect on the direction of Flow Capital i.e., Flow Capital and Nuveen Arizona go up and down completely randomly.

Pair Corralation between Flow Capital and Nuveen Arizona

Assuming the 90 days horizon Flow Capital Corp is expected to under-perform the Nuveen Arizona. In addition to that, Flow Capital is 1.21 times more volatile than Nuveen Arizona Quality. It trades about -0.13 of its total potential returns per unit of risk. Nuveen Arizona Quality is currently generating about 0.1 per unit of volatility. If you would invest  1,108  in Nuveen Arizona Quality on December 26, 2024 and sell it today you would earn a total of  94.00  from holding Nuveen Arizona Quality or generate 8.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Flow Capital Corp  vs.  Nuveen Arizona Quality

Flow Capital Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Flow Capital Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Nuveen Arizona Quality

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Arizona Quality are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly abnormal basic indicators, Nuveen Arizona may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Flow Capital and Nuveen Arizona

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

The idea behind Flow Capital Corp and Nuveen Arizona Quality 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.