Correlation Between Guidemark World and Nuveen Strategic

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

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

Diversification Opportunities for Guidemark World and Nuveen Strategic

0.42

Correlation Coefficient

Guidemark World  Nuveen Strategic

Very weak diversification

The 3 months correlation between Guidemark and Nuveen is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Guidemark World Ex Us and Nuveen Strategic Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Strategic Mun and Guidemark World 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 Guidemark World Ex Us are associated (or correlated) with Nuveen Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Strategic Mun has no effect on the direction of Guidemark World i.e., Guidemark World and Nuveen Strategic go up and down completely randomly.

Pair Corralation between Guidemark World and Nuveen Strategic

Assuming the 90 days horizon Guidemark World Ex Us is expected to under-perform the Nuveen Strategic. In addition to that, Guidemark World is 2.63 times more volatile than Nuveen Strategic Municipal. It trades about -0.2 of its total potential returns per unit of risk. Nuveen Strategic Municipal is currently generating about -0.32 per unit of volatility. If you would invest  1,015  in Nuveen Strategic Municipal on October 11, 2024 and sell it today you would lose (16.00) from holding Nuveen Strategic Municipal or give up 1.58% of portfolio value over 90 days.

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

Guidemark World Ex Us  vs.  Nuveen Strategic Municipal

Guidemark World Ex

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guidemark World Ex Us has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Guidemark World is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Nuveen Strategic Mun

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nuveen Strategic Municipal has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Nuveen Strategic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Guidemark World and Nuveen Strategic

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

The idea behind Guidemark World Ex Us and Nuveen Strategic 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.