Correlation Between American Century and Nuveen ESG

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

By analyzing existing cross correlation between American Century Diversified and Nuveen ESG Large Cap, you can compare the effects of market volatilities on American Century and Nuveen ESG 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 American Century with a short position of Nuveen ESG. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Century and Nuveen ESG.

Diversification Opportunities for American Century and Nuveen ESG

0.2

Correlation Coefficient

American Century  Nuveen ESG

Modest diversification

The 3 months correlation between American and Nuveen is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding American Century Diversified and Nuveen ESG Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen ESG Large and American Century 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 American Century Diversified are associated (or correlated) with Nuveen ESG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen ESG Large has no effect on the direction of American Century i.e., American Century and Nuveen ESG go up and down completely randomly.

Pair Corralation between American Century and Nuveen ESG

Given the investment horizon of 90 days American Century Diversified is expected to under-perform the Nuveen ESG. But the etf apears to be less risky and, when comparing its historical volatility, American Century Diversified is 2.78 times less risky than Nuveen ESG. The etf trades about -0.03 of its potential returns per unit of risk. The Nuveen ESG Large Cap is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  8,444  in Nuveen ESG Large Cap on October 25, 2024 and sell it today you would earn a total of  571.00  from holding Nuveen ESG Large Cap or generate 6.76% return on investment over 90 days.

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

American Century Diversified  vs.  Nuveen ESG Large Cap

American Century Div

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American Century Diversified has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, American Century is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Nuveen ESG Large

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen ESG Large Cap are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, Nuveen ESG may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with American Century and Nuveen ESG

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

The idea behind American Century Diversified and Nuveen ESG Large Cap 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.