Correlation Between Loews Corp and Nuveen California

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

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

Diversification Opportunities for Loews Corp and Nuveen California

0.4

Correlation Coefficient

Loews Corp  Nuveen California

Very weak diversification

The 3 months correlation between Loews and Nuveen is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Loews Corp and Nuveen California Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen California Select and Loews Corp 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 Loews Corp are associated (or correlated) with Nuveen California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen California Select has no effect on the direction of Loews Corp i.e., Loews Corp and Nuveen California go up and down completely randomly.

Pair Corralation between Loews Corp and Nuveen California

Taking into account the 90-day investment horizon Loews Corp is expected to generate 2.65 times more return on investment than Nuveen California. However, Loews Corp is 2.65 times more volatile than Nuveen California Select. It trades about 0.12 of its potential returns per unit of risk. Nuveen California Select is currently generating about 0.07 per unit of risk. If you would invest  8,433  in Loews Corp on December 28, 2024 and sell it today you would earn a total of  707.00  from holding Loews Corp or generate 8.38% return on investment over 90 days.

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

Loews Corp  vs.  Nuveen California Select

Loews Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Loews Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating essential indicators, Loews Corp may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Nuveen California Select

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen California Select are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Nuveen California is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Loews Corp and Nuveen California

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

The idea behind Loews Corp and Nuveen California Select 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.