Correlation Between Diamond Hill and Nuveen Multi

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

By analyzing existing cross correlation between Diamond Hill Investment and Nuveen Multi Asset Income, you can compare the effects of market volatilities on Diamond Hill and Nuveen Multi 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 Diamond Hill with a short position of Nuveen Multi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamond Hill and Nuveen Multi.

Diversification Opportunities for Diamond Hill and Nuveen Multi

-0.57

Correlation Coefficient

Diamond Hill  Nuveen Multi

Excellent diversification

The 3 months correlation between Diamond and Nuveen is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Hill Investment and Nuveen Multi Asset Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Multi Asset and Diamond Hill 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 Diamond Hill Investment are associated (or correlated) with Nuveen Multi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Multi Asset has no effect on the direction of Diamond Hill i.e., Diamond Hill and Nuveen Multi go up and down completely randomly.

Pair Corralation between Diamond Hill and Nuveen Multi

Given the investment horizon of 90 days Diamond Hill Investment is expected to under-perform the Nuveen Multi. In addition to that, Diamond Hill is 2.14 times more volatile than Nuveen Multi Asset Income. It trades about -0.08 of its total potential returns per unit of risk. Nuveen Multi Asset Income is currently generating about 0.1 per unit of volatility. If you would invest  1,168  in Nuveen Multi Asset Income on December 28, 2024 and sell it today you would earn a total of  35.00  from holding Nuveen Multi Asset Income or generate 3.0% return on investment over 90 days.

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

Diamond Hill Investment  vs.  Nuveen Multi Asset Income

Diamond Hill Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Diamond Hill Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward indicators, Diamond Hill is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Nuveen Multi Asset

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Multi Asset Income are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Nuveen Multi is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Diamond Hill and Nuveen Multi

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

The idea behind Diamond Hill Investment and Nuveen Multi Asset Income 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.