Correlation Between Nuveen Real and Nuveen Pennsylvania

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

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

Diversification Opportunities for Nuveen Real and Nuveen Pennsylvania

0.74

Correlation Coefficient

Nuveen Real  Nuveen Pennsylvania

Poor diversification

The 3 months correlation between Nuveen and Nuveen is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Real Estate and Nuveen Pennsylvania Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Pennsylvania and Nuveen Real 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 Real Estate are associated (or correlated) with Nuveen Pennsylvania. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Pennsylvania has no effect on the direction of Nuveen Real i.e., Nuveen Real and Nuveen Pennsylvania go up and down completely randomly.

Pair Corralation between Nuveen Real and Nuveen Pennsylvania

Assuming the 90 days horizon Nuveen Real Estate is expected to generate 3.59 times more return on investment than Nuveen Pennsylvania. However, Nuveen Real is 3.59 times more volatile than Nuveen Pennsylvania Municipal. It trades about 0.03 of its potential returns per unit of risk. Nuveen Pennsylvania Municipal is currently generating about -0.08 per unit of risk. If you would invest  1,443  in Nuveen Real Estate on December 28, 2024 and sell it today you would earn a total of  20.00  from holding Nuveen Real Estate or generate 1.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Nuveen Real Estate  vs.  Nuveen Pennsylvania Municipal

Nuveen Real Estate

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Real Estate are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Nuveen Real is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Nuveen Pennsylvania

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nuveen Pennsylvania Municipal has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Nuveen Pennsylvania 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 Real and Nuveen Pennsylvania

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

The idea behind Nuveen Real Estate and Nuveen Pennsylvania Municipal 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.