Correlation Between Investcorp Credit and Nuveen Arizona

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

By analyzing existing cross correlation between Investcorp Credit Management and Nuveen Arizona Quality, you can compare the effects of market volatilities on Investcorp Credit and Nuveen Arizona 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 Investcorp Credit with a short position of Nuveen Arizona. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investcorp Credit and Nuveen Arizona.

Diversification Opportunities for Investcorp Credit and Nuveen Arizona

0.59

Correlation Coefficient

Investcorp Credit  Nuveen Arizona

Very weak diversification

The 3 months correlation between Investcorp and Nuveen is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Investcorp Credit Management and Nuveen Arizona Quality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Arizona Quality and Investcorp Credit 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 Investcorp Credit Management are associated (or correlated) with Nuveen Arizona. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Arizona Quality has no effect on the direction of Investcorp Credit i.e., Investcorp Credit and Nuveen Arizona go up and down completely randomly.

Pair Corralation between Investcorp Credit and Nuveen Arizona

Given the investment horizon of 90 days Investcorp Credit is expected to generate 1.56 times less return on investment than Nuveen Arizona. But when comparing it to its historical volatility, Investcorp Credit Management is 1.47 times less risky than Nuveen Arizona. It trades about 0.09 of its potential returns per unit of risk. Nuveen Arizona Quality is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,112  in Nuveen Arizona Quality on December 27, 2024 and sell it today you would earn a total of  90.00  from holding Nuveen Arizona Quality or generate 8.09% return on investment over 90 days.

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

Investcorp Credit Management  vs.  Nuveen Arizona Quality

Investcorp Credit

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Investcorp Credit Management are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong primary indicators, Investcorp Credit is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Nuveen Arizona Quality

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Arizona Quality are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly abnormal basic indicators, Nuveen Arizona may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Investcorp Credit and Nuveen Arizona

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

The idea behind Investcorp Credit Management and Nuveen Arizona Quality 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..