Correlation Between Nuveen Core and Western Asset

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

By analyzing existing cross correlation between Nuveen Core Equity and Western Asset Global, you can compare the effects of market volatilities on Nuveen Core and Western Asset 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 Core with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen Core and Western Asset.

Diversification Opportunities for Nuveen Core and Western Asset

0.19

Correlation Coefficient

Nuveen Core  Western Asset

Average diversification

The 3 months correlation between Nuveen and Western is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Core Equity and Western Asset Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Global and Nuveen Core 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 Core Equity are associated (or correlated) with Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Global has no effect on the direction of Nuveen Core i.e., Nuveen Core and Western Asset go up and down completely randomly.

Pair Corralation between Nuveen Core and Western Asset

Considering the 90-day investment horizon Nuveen Core Equity is expected to generate 1.0 times more return on investment than Western Asset. However, Nuveen Core is 1.0 times more volatile than Western Asset Global. It trades about 0.18 of its potential returns per unit of risk. Western Asset Global is currently generating about 0.01 per unit of risk. If you would invest  1,498  in Nuveen Core Equity on September 12, 2024 and sell it today you would earn a total of  116.00  from holding Nuveen Core Equity or generate 7.74% return on investment over 90 days.

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

Nuveen Core Equity  vs.  Western Asset Global

Nuveen Core Equity

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Core Equity are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather weak fundamental indicators, Nuveen Core may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Western Asset Global

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Western Asset Global are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. Despite fairly strong technical indicators, Western Asset is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Nuveen Core and Western Asset

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

The idea behind Nuveen Core Equity and Western Asset Global 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.