Correlation Between BlackRock Utility and Nuveen NASDAQ

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

By analyzing existing cross correlation between BlackRock Utility Infrastructure and Nuveen NASDAQ 100, you can compare the effects of market volatilities on BlackRock Utility and Nuveen NASDAQ 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 Utility with a short position of Nuveen NASDAQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlackRock Utility and Nuveen NASDAQ.

Diversification Opportunities for BlackRock Utility and Nuveen NASDAQ

-0.05

Correlation Coefficient

BlackRock Utility  Nuveen NASDAQ

Good diversification

The 3 months correlation between BlackRock and Nuveen is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock Utility Infrastructu and Nuveen NASDAQ 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen NASDAQ 100 and BlackRock Utility 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 Utility Infrastructure are associated (or correlated) with Nuveen NASDAQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen NASDAQ 100 has no effect on the direction of BlackRock Utility i.e., BlackRock Utility and Nuveen NASDAQ go up and down completely randomly.

Pair Corralation between BlackRock Utility and Nuveen NASDAQ

Considering the 90-day investment horizon BlackRock Utility is expected to generate 7.6 times less return on investment than Nuveen NASDAQ. But when comparing it to its historical volatility, BlackRock Utility Infrastructure is 1.24 times less risky than Nuveen NASDAQ. It trades about 0.01 of its potential returns per unit of risk. Nuveen NASDAQ 100 is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2,415  in Nuveen NASDAQ 100 on September 21, 2024 and sell it today you would earn a total of  231.00  from holding Nuveen NASDAQ 100 or generate 9.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.07%
Values	Daily Returns

BlackRock Utility Infrastructu  vs.  Nuveen NASDAQ 100

BlackRock Utility

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BlackRock Utility Infrastructure has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, BlackRock Utility is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Nuveen NASDAQ 100

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen NASDAQ 100 are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, Nuveen NASDAQ may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with BlackRock Utility and Nuveen NASDAQ

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

The idea behind BlackRock Utility Infrastructure and Nuveen NASDAQ 100 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.