Correlation Between BlackRock Capital and Nuveen SP

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

By analyzing existing cross correlation between BlackRock Capital Allocation and Nuveen SP 500, you can compare the effects of market volatilities on BlackRock Capital and Nuveen SP 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 BlackRock Capital with a short position of Nuveen SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlackRock Capital and Nuveen SP.

Diversification Opportunities for BlackRock Capital and Nuveen SP

0.78

Correlation Coefficient

BlackRock Capital  Nuveen SP

Poor diversification

The 3 months correlation between BlackRock and Nuveen is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock Capital Allocation and Nuveen SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen SP 500 and BlackRock 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 BlackRock Capital Allocation are associated (or correlated) with Nuveen SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen SP 500 has no effect on the direction of BlackRock Capital i.e., BlackRock Capital and Nuveen SP go up and down completely randomly.

Pair Corralation between BlackRock Capital and Nuveen SP

Given the investment horizon of 90 days BlackRock Capital is expected to generate 2.67 times less return on investment than Nuveen SP. In addition to that, BlackRock Capital is 1.07 times more volatile than Nuveen SP 500. It trades about 0.1 of its total potential returns per unit of risk. Nuveen SP 500 is currently generating about 0.28 per unit of volatility. If you would invest  1,611  in Nuveen SP 500 on September 4, 2024 and sell it today you would earn a total of  159.00  from holding Nuveen SP 500 or generate 9.87% return on investment over 90 days.

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

BlackRock Capital Allocation  vs.  Nuveen SP 500

BlackRock Capital

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock Capital Allocation are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, BlackRock Capital is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Nuveen SP 500

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen SP 500 are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Nuveen SP may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with BlackRock Capital and Nuveen SP

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

The idea behind BlackRock Capital Allocation and Nuveen SP 500 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.