Correlation Between Nuveen Georgia and Global Diversified

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

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

Diversification Opportunities for Nuveen Georgia and Global Diversified

0.64

Correlation Coefficient

Nuveen Georgia  Global Diversified

Poor diversification

The 3 months correlation between Nuveen and Global is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Georgia Municipal and Global Diversified Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Diversified Income and Nuveen Georgia 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 Georgia Municipal are associated (or correlated) with Global Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Diversified Income has no effect on the direction of Nuveen Georgia i.e., Nuveen Georgia and Global Diversified go up and down completely randomly.

Pair Corralation between Nuveen Georgia and Global Diversified

Assuming the 90 days horizon Nuveen Georgia is expected to generate 2.03 times less return on investment than Global Diversified. In addition to that, Nuveen Georgia is 1.06 times more volatile than Global Diversified Income. It trades about 0.04 of its total potential returns per unit of risk. Global Diversified Income is currently generating about 0.08 per unit of volatility. If you would invest  1,084  in Global Diversified Income on October 4, 2024 and sell it today you would earn a total of  101.00  from holding Global Diversified Income or generate 9.32% return on investment over 90 days.

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

Nuveen Georgia Municipal  vs.  Global Diversified Income

Nuveen Georgia Municipal

Risk-Adjusted Performance

0 of 100

Very Weak

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

Global Diversified Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Diversified Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Global Diversified 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 Georgia and Global Diversified

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

The idea behind Nuveen Georgia Municipal and Global Diversified 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.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.