Correlation Between Stone Harbor and Nuveen Mortgage

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

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

Diversification Opportunities for Stone Harbor and Nuveen Mortgage

0.89

Correlation Coefficient

Stone Harbor  Nuveen Mortgage

Very poor diversification

The 3 months correlation between Stone and Nuveen is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Stone Harbor Emerging 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 Stone Harbor 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 Stone Harbor Emerging 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 Stone Harbor i.e., Stone Harbor and Nuveen Mortgage go up and down completely randomly.

Pair Corralation between Stone Harbor and Nuveen Mortgage

Considering the 90-day investment horizon Stone Harbor Emerging is expected to generate 2.28 times more return on investment than Nuveen Mortgage. However, Stone Harbor is 2.28 times more volatile than Nuveen Mortgage Opportunity. It trades about 0.16 of its potential returns per unit of risk. Nuveen Mortgage Opportunity is currently generating about 0.24 per unit of risk. If you would invest  461.00  in Stone Harbor Emerging on December 27, 2024 and sell it today you would earn a total of  48.00  from holding Stone Harbor Emerging or generate 10.41% return on investment over 90 days.

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

Stone Harbor Emerging  vs.  Nuveen Mortgage Opportunity

Stone Harbor Emerging

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Stone Harbor Emerging are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. Despite nearly inconsistent fundamental indicators, Stone Harbor may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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 Stone Harbor and Nuveen Mortgage

The main advantage of trading using opposite Stone Harbor and Nuveen Mortgage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stone Harbor 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 Stone Harbor Emerging 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.