Correlation Between Emerging Markets and Nuveen Global

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

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

Diversification Opportunities for Emerging Markets and Nuveen Global

0.8

Correlation Coefficient

Emerging Markets  Nuveen Global

Very poor diversification

The 3 months correlation between Emerging and Nuveen is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Emerging Markets Fund and Nuveen Global Infrastructure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Global Infras and Emerging Markets 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 Emerging Markets Fund are associated (or correlated) with Nuveen Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Global Infras has no effect on the direction of Emerging Markets i.e., Emerging Markets and Nuveen Global go up and down completely randomly.

Pair Corralation between Emerging Markets and Nuveen Global

Assuming the 90 days horizon Emerging Markets is expected to generate 1.08 times less return on investment than Nuveen Global. In addition to that, Emerging Markets is 1.09 times more volatile than Nuveen Global Infrastructure. It trades about 0.11 of its total potential returns per unit of risk. Nuveen Global Infrastructure is currently generating about 0.13 per unit of volatility. If you would invest  1,130  in Nuveen Global Infrastructure on December 30, 2024 and sell it today you would earn a total of  69.00  from holding Nuveen Global Infrastructure or generate 6.11% return on investment over 90 days.

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

Emerging Markets Fund  vs.  Nuveen Global Infrastructure

Emerging Markets

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Emerging Markets Fund are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Emerging Markets is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Nuveen Global Infras

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Global Infrastructure are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Nuveen Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Emerging Markets and Nuveen Global

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

The idea behind Emerging Markets Fund and Nuveen Global Infrastructure 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.