Correlation Between Nuveen Real and Large Cap

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

Diversification Opportunities for Nuveen Real and Large Cap

0.23

Correlation Coefficient

Nuveen Real  Large Cap

Modest diversification

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

Pair Corralation between Nuveen Real and Large Cap

Assuming the 90 days horizon Nuveen Real Estate is expected to generate 1.06 times more return on investment than Large Cap. However, Nuveen Real is 1.06 times more volatile than Large Cap Value. It trades about 0.04 of its potential returns per unit of risk. Large Cap Value is currently generating about -0.01 per unit of risk. If you would invest  1,445  in Nuveen Real Estate on December 20, 2024 and sell it today you would earn a total of  32.00  from holding Nuveen Real Estate or generate 2.21% return on investment over 90 days.

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

Nuveen Real Estate  vs.  Large Cap Value

Nuveen Real Estate

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Real Estate are ranked lower than 3 (%) 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.

Large Cap Value

Risk-Adjusted Performance

Very Weak

Over the last 90 days Large Cap Value has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Large Cap 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 Large Cap

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

The idea behind Nuveen Real Estate and Large Cap Value 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 Anywhere module to track or share privately all of your investments from the convenience of any device.