Correlation Between Emerald Growth and Nuveen Small

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

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

Diversification Opportunities for Emerald Growth and Nuveen Small

0.5

Correlation Coefficient

Emerald Growth  Nuveen Small

Very weak diversification

The 3 months correlation between Emerald and Nuveen is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Emerald Growth Fund 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 Emerald Growth 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 Emerald Growth Fund 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 Emerald Growth i.e., Emerald Growth and Nuveen Small go up and down completely randomly.

Pair Corralation between Emerald Growth and Nuveen Small

Assuming the 90 days horizon Emerald Growth is expected to generate 1.04 times less return on investment than Nuveen Small. But when comparing it to its historical volatility, Emerald Growth Fund is 1.11 times less risky than Nuveen Small. It trades about 0.2 of its potential returns per unit of risk. Nuveen Small Cap is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  3,633  in Nuveen Small Cap on October 26, 2024 and sell it today you would earn a total of  135.00  from holding Nuveen Small Cap or generate 3.72% return on investment over 90 days.

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

Emerald Growth Fund  vs.  Nuveen Small Cap

Emerald Growth

Risk-Adjusted Performance

0 of 100

Very Weak

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

Nuveen Small Cap

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Small Cap are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Nuveen Small may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Emerald Growth and Nuveen Small

The main advantage of trading using opposite Emerald Growth and Nuveen Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerald Growth 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 Emerald Growth Fund 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.