Correlation Between Carillon Scout and Nuveen Small

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

By analyzing existing cross correlation between Carillon Scout Mid and Nuveen Small Cap, you can compare the effects of market volatilities on Carillon Scout and Nuveen Small 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 Carillon Scout with a short position of Nuveen Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carillon Scout and Nuveen Small.

Diversification Opportunities for Carillon Scout and Nuveen Small

0.76

Correlation Coefficient

Carillon Scout  Nuveen Small

Poor diversification

The 3 months correlation between Carillon and Nuveen is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Carillon Scout Mid and Nuveen Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Small Cap and Carillon Scout 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 Carillon Scout Mid are associated (or correlated) with Nuveen Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Small Cap has no effect on the direction of Carillon Scout i.e., Carillon Scout and Nuveen Small go up and down completely randomly.

Pair Corralation between Carillon Scout and Nuveen Small

Assuming the 90 days horizon Carillon Scout Mid is expected to under-perform the Nuveen Small. In addition to that, Carillon Scout is 2.07 times more volatile than Nuveen Small Cap. It trades about -0.14 of its total potential returns per unit of risk. Nuveen Small Cap is currently generating about -0.14 per unit of volatility. If you would invest  3,571  in Nuveen Small Cap on December 2, 2024 and sell it today you would lose (294.00) from holding Nuveen Small Cap or give up 8.23% of portfolio value over 90 days.

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

Carillon Scout Mid  vs.  Nuveen Small Cap

Carillon Scout Mid

Risk-Adjusted Performance

Very Weak

Over the last 90 days Carillon Scout Mid has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Nuveen Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nuveen Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Carillon Scout and Nuveen Small

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

The idea behind Carillon Scout Mid and Nuveen Small Cap 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.