Correlation Between Nuveen Large and Nuveen Small

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

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

Diversification Opportunities for Nuveen Large and Nuveen Small

0.23

Correlation Coefficient

Nuveen Large  Nuveen Small

Modest diversification

The 3 months correlation between Nuveen and Nuveen is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Large Cap and Nuveen Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Small Cap and Nuveen Large 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 Large Cap are associated (or correlated) with Nuveen Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Small Cap has no effect on the direction of Nuveen Large i.e., Nuveen Large and Nuveen Small go up and down completely randomly.

Pair Corralation between Nuveen Large and Nuveen Small

Assuming the 90 days horizon Nuveen Large Cap is expected to under-perform the Nuveen Small. In addition to that, Nuveen Large is 2.16 times more volatile than Nuveen Small Cap. It trades about -0.25 of its total potential returns per unit of risk. Nuveen Small Cap is currently generating about -0.12 per unit of volatility. 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 Weak
Accuracy	100.0%
Values	Daily Returns

Nuveen Large Cap  vs.  Nuveen Small Cap

Nuveen Large Cap

Risk-Adjusted Performance

0 of 100

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 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 Small Cap

Risk-Adjusted Performance

4 of 100

Insignificant

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.

Pair Trading with Nuveen Large and Nuveen Small

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

The idea behind Nuveen Large Cap and Nuveen Small 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.