Correlation Between BlackRock Floating and Nuveen Mortgage

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

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

Diversification Opportunities for BlackRock Floating and Nuveen Mortgage

0.3

Correlation Coefficient

BlackRock Floating  Nuveen Mortgage

Weak diversification

The 3 months correlation between BlackRock and Nuveen is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock Floating Rate and Nuveen Mortgage Opportunity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Mortgage Oppo and BlackRock Floating 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 Floating Rate are associated (or correlated) with Nuveen Mortgage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Mortgage Oppo has no effect on the direction of BlackRock Floating i.e., BlackRock Floating and Nuveen Mortgage go up and down completely randomly.

Pair Corralation between BlackRock Floating and Nuveen Mortgage

Considering the 90-day investment horizon BlackRock Floating Rate is expected to under-perform the Nuveen Mortgage. In addition to that, BlackRock Floating is 1.12 times more volatile than Nuveen Mortgage Opportunity. It trades about -0.03 of its total potential returns per unit of risk. Nuveen Mortgage Opportunity is currently generating about 0.23 per unit of volatility. If you would invest  1,760  in Nuveen Mortgage Opportunity on December 29, 2024 and sell it today you would earn a total of  117.00  from holding Nuveen Mortgage Opportunity or generate 6.65% return on investment over 90 days.

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

BlackRock Floating Rate  vs.  Nuveen Mortgage Opportunity

BlackRock Floating Rate

Risk-Adjusted Performance

Very Weak

Over the last 90 days BlackRock Floating Rate has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, BlackRock Floating is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Nuveen Mortgage Oppo

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Mortgage Opportunity are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent essential indicators, Nuveen Mortgage may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with BlackRock Floating and Nuveen Mortgage

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

The idea behind BlackRock Floating Rate and Nuveen Mortgage Opportunity 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.