Correlation Between Nuveen Mid and Nuveen Large

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

Diversification Opportunities for Nuveen Mid and Nuveen Large

0.8

Correlation Coefficient

Nuveen Mid  Nuveen Large

Very poor diversification

The 3 months correlation between Nuveen and Nuveen is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Mid Cap and Nuveen Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen 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 Nuveen Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Large Cap has no effect on the direction of Nuveen Mid i.e., Nuveen Mid and Nuveen Large go up and down completely randomly.

Pair Corralation between Nuveen Mid and Nuveen Large

Assuming the 90 days horizon Nuveen Mid Cap is expected to under-perform the Nuveen Large. In addition to that, Nuveen Mid is 1.47 times more volatile than Nuveen Large Cap. It trades about -0.13 of its total potential returns per unit of risk. Nuveen Large Cap is currently generating about -0.11 per unit of volatility. If you would invest  4,153  in Nuveen Large Cap on December 21, 2024 and sell it today you would lose (280.00) from holding Nuveen Large Cap or give up 6.74% of portfolio value over 90 days.

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

Nuveen Mid Cap  vs.  Nuveen Large Cap

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 latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Nuveen Large Cap

Risk-Adjusted Performance

Very Weak

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

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

The idea behind Nuveen Mid Cap and Nuveen 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.