Correlation Between First Trust and Nuveen Global

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

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

Diversification Opportunities for First Trust and Nuveen Global

0.2

Correlation Coefficient

First Trust  Nuveen Global

Modest diversification

The 3 months correlation between First and Nuveen is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Intermediate and Nuveen Global High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Global High and First Trust 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 First Trust Intermediate are associated (or correlated) with Nuveen Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Global High has no effect on the direction of First Trust i.e., First Trust and Nuveen Global go up and down completely randomly.

Pair Corralation between First Trust and Nuveen Global

Considering the 90-day investment horizon First Trust is expected to generate 1.37 times less return on investment than Nuveen Global. In addition to that, First Trust is 1.17 times more volatile than Nuveen Global High. It trades about 0.05 of its total potential returns per unit of risk. Nuveen Global High is currently generating about 0.08 per unit of volatility. If you would invest  937.00  in Nuveen Global High on September 26, 2024 and sell it today you would earn a total of  335.00  from holding Nuveen Global High or generate 35.75% return on investment over 90 days.

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

First Trust Intermediate  vs.  Nuveen Global High

First Trust Intermediate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Trust Intermediate has generated negative risk-adjusted returns adding no value to fund investors. Despite nearly stable basic indicators, First Trust is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Nuveen Global High

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nuveen Global High has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Nuveen Global is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with First Trust and Nuveen Global

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

The idea behind First Trust Intermediate and Nuveen Global High 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.