Correlation Between Nuveen Small and Small Company

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

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

Diversification Opportunities for Nuveen Small and Small Company

0.95

Correlation Coefficient

Nuveen Small  Small Company

Almost no diversification

The 3 months correlation between Nuveen and Small is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Small Cap and Small Pany Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Pany Growth and Nuveen Small 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 Small Cap are associated (or correlated) with Small Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Pany Growth has no effect on the direction of Nuveen Small i.e., Nuveen Small and Small Company go up and down completely randomly.

Pair Corralation between Nuveen Small and Small Company

Assuming the 90 days horizon Nuveen Small Cap is expected to generate 1.1 times more return on investment than Small Company. However, Nuveen Small is 1.1 times more volatile than Small Pany Growth. It trades about -0.12 of its potential returns per unit of risk. Small Pany Growth is currently generating about -0.22 per unit of risk. If you would invest  3,733  in Nuveen Small Cap on October 11, 2024 and sell it today you would lose (123.00) from holding Nuveen Small Cap or give up 3.29% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.24%
Values	Daily Returns

Nuveen Small Cap  vs.  Small Pany Growth

Nuveen Small Cap

Risk-Adjusted Performance

4 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Small Cap are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Nuveen Small is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Small Pany Growth

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Small Pany Growth are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Small Company 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 Small and Small Company

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

The idea behind Nuveen Small Cap and Small Pany Growth 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.