Correlation Between Davis Select and Nuveen ESG

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

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

Diversification Opportunities for Davis Select and Nuveen ESG

-0.55

Correlation Coefficient

Davis Select  Nuveen ESG

Excellent diversification

The 3 months correlation between Davis and Nuveen is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Davis Select International and Nuveen ESG Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen ESG Mid and Davis Select 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 Davis Select International are associated (or correlated) with Nuveen ESG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen ESG Mid has no effect on the direction of Davis Select i.e., Davis Select and Nuveen ESG go up and down completely randomly.

Pair Corralation between Davis Select and Nuveen ESG

Given the investment horizon of 90 days Davis Select International is expected to under-perform the Nuveen ESG. But the etf apears to be less risky and, when comparing its historical volatility, Davis Select International is 1.33 times less risky than Nuveen ESG. The etf trades about -0.46 of its potential returns per unit of risk. The Nuveen ESG Mid Cap is currently generating about -0.23 of returns per unit of risk over similar time horizon. If you would invest  5,046  in Nuveen ESG Mid Cap on October 8, 2024 and sell it today you would lose (271.00) from holding Nuveen ESG Mid Cap or give up 5.37% of portfolio value over 90 days.

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

Davis Select International  vs.  Nuveen ESG Mid Cap

Davis Select Interna

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Davis Select International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Etf's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

Nuveen ESG Mid

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen ESG Mid Cap are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain primary indicators, Nuveen ESG may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Davis Select and Nuveen ESG

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

The idea behind Davis Select International and Nuveen ESG Mid 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.