Correlation Between Nuveen Mid and Guggenheim Large

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

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

Diversification Opportunities for Nuveen Mid and Guggenheim Large

0.9

Correlation Coefficient

Nuveen Mid  Guggenheim Large

Almost no diversification

The 3 months correlation between Nuveen and Guggenheim is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Mid Cap and Guggenheim Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guggenheim Large Cap and Nuveen Mid 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 Nuveen Mid Cap are associated (or correlated) with Guggenheim Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guggenheim Large Cap has no effect on the direction of Nuveen Mid i.e., Nuveen Mid and Guggenheim Large go up and down completely randomly.

Pair Corralation between Nuveen Mid and Guggenheim Large

Assuming the 90 days horizon Nuveen Mid Cap is expected to generate 0.89 times more return on investment than Guggenheim Large. However, Nuveen Mid Cap is 1.12 times less risky than Guggenheim Large. It trades about -0.09 of its potential returns per unit of risk. Guggenheim Large Cap is currently generating about -0.15 per unit of risk. If you would invest  5,323  in Nuveen Mid Cap on October 6, 2024 and sell it today you would lose (272.00) from holding Nuveen Mid Cap or give up 5.11% of portfolio value over 90 days.

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

Nuveen Mid Cap  vs.  Guggenheim Large Cap

Nuveen Mid Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nuveen Mid Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Nuveen Mid is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Guggenheim Large Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guggenheim Large Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward 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 Nuveen Mid and Guggenheim Large

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

The idea behind Nuveen Mid Cap and Guggenheim Large 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.