Correlation Between Nuveen Floating and Western Asset

Can any of the company-specific risk be diversified away by investing in both Nuveen Floating 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 Floating 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 Floating Rate and Western Asset High, you can compare the effects of market volatilities on Nuveen Floating 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 Floating with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen Floating and Western Asset.

Diversification Opportunities for Nuveen Floating and Western Asset

0.19

Correlation Coefficient

Nuveen Floating  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 Floating Rate and Western Asset High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset High 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 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 High has no effect on the direction of Nuveen Floating i.e., Nuveen Floating and Western Asset go up and down completely randomly.

Pair Corralation between Nuveen Floating and Western Asset

Considering the 90-day investment horizon Nuveen Floating Rate is expected to generate 1.05 times more return on investment than Western Asset. However, Nuveen Floating is 1.05 times more volatile than Western Asset High. It trades about 0.13 of its potential returns per unit of risk. Western Asset High is currently generating about -0.06 per unit of risk. If you would invest  857.00  in Nuveen Floating Rate on September 28, 2024 and sell it today you would earn a total of  42.00  from holding Nuveen Floating Rate or generate 4.9% return on investment over 90 days.

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

Nuveen Floating Rate  vs.  Western Asset High

Nuveen Floating Rate

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Floating Rate are ranked lower than 10 (%) 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 newest stock price agitation, may contribute to short-term losses for the retail investors.

Western Asset High

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Western Asset High has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic 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 Floating and Western Asset

The main advantage of trading using opposite Nuveen Floating and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nuveen Floating 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 Floating Rate and Western Asset High 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 CEOs Directory module to screen CEOs from public companies around the world.