Correlation Between Nuveen Floating and FAM

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

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

Diversification Opportunities for Nuveen Floating and FAM

0.75

Correlation Coefficient

Nuveen Floating  FAM

Poor diversification

The 3 months correlation between Nuveen and FAM is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Floating Rate and FAM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FAM and Nuveen Floating 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 Floating Rate are associated (or correlated) with FAM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FAM has no effect on the direction of Nuveen Floating i.e., Nuveen Floating and FAM go up and down completely randomly.

Pair Corralation between Nuveen Floating and FAM

Considering the 90-day investment horizon Nuveen Floating Rate is expected to generate 0.74 times more return on investment than FAM. However, Nuveen Floating Rate is 1.35 times less risky than FAM. It trades about 0.14 of its potential returns per unit of risk. FAM is currently generating about 0.1 per unit of risk. If you would invest  660.00  in Nuveen Floating Rate on September 1, 2024 and sell it today you would earn a total of  252.00  from holding Nuveen Floating Rate or generate 38.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	87.37%
Values	Daily Returns

Nuveen Floating Rate  vs.  FAM

Nuveen Floating Rate

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Floating Rate are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. Even with relatively invariable technical and fundamental indicators, Nuveen Floating is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

FAM

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days FAM has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very uncertain basic indicators, FAM displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nuveen Floating and FAM

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

The idea behind Nuveen Floating Rate and FAM 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.