Correlation Between Nuveen Mid and Fidelity® Government

Can any of the company-specific risk be diversified away by investing in both Nuveen Mid and Fidelity® Government 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 Fidelity® Government 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 Fidelity Government Money, you can compare the effects of market volatilities on Nuveen Mid and Fidelity® Government 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 Fidelity® Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen Mid and Fidelity® Government.

Diversification Opportunities for Nuveen Mid and Fidelity® Government

-0.32

Correlation Coefficient

Nuveen Mid  Fidelity® Government

Very good diversification

The 3 months correlation between Nuveen and Fidelity® is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Mid Cap and Fidelity Government Money in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Government Money 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 Fidelity® Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Government Money has no effect on the direction of Nuveen Mid i.e., Nuveen Mid and Fidelity® Government go up and down completely randomly.

Pair Corralation between Nuveen Mid and Fidelity® Government

Assuming the 90 days horizon Nuveen Mid Cap is expected to under-perform the Fidelity® Government. In addition to that, Nuveen Mid is 7.03 times more volatile than Fidelity Government Money. It trades about -0.04 of its total potential returns per unit of risk. Fidelity Government Money is currently generating about 0.13 per unit of volatility. If you would invest  99.00  in Fidelity Government Money on December 21, 2024 and sell it today you would earn a total of  1.00  from holding Fidelity Government Money or generate 1.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

Nuveen Mid Cap  vs.  Fidelity Government Money

Nuveen Mid Cap

Risk-Adjusted Performance

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 technical and fundamental indicators, Nuveen Mid is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fidelity Government Money

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Government Money are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Fidelity® Government is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nuveen Mid and Fidelity® Government

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

The idea behind Nuveen Mid Cap and Fidelity Government Money 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.