Correlation Between VictoryShares THB and Nuveen ESG

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

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

Diversification Opportunities for VictoryShares THB and Nuveen ESG

0.67

Correlation Coefficient

VictoryShares THB  Nuveen ESG

Poor diversification

The 3 months correlation between VictoryShares and Nuveen is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding VictoryShares THB Mid 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 VictoryShares THB 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 VictoryShares THB Mid 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 VictoryShares THB i.e., VictoryShares THB and Nuveen ESG go up and down completely randomly.

Pair Corralation between VictoryShares THB and Nuveen ESG

Given the investment horizon of 90 days VictoryShares THB Mid is expected to generate 0.91 times more return on investment than Nuveen ESG. However, VictoryShares THB Mid is 1.09 times less risky than Nuveen ESG. It trades about -0.06 of its potential returns per unit of risk. Nuveen ESG Large Cap is currently generating about -0.06 per unit of risk. If you would invest  2,812  in VictoryShares THB Mid on December 23, 2024 and sell it today you would lose (103.00) from holding VictoryShares THB Mid or give up 3.66% of portfolio value over 90 days.

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

VictoryShares THB Mid  vs.  Nuveen ESG Large Cap

VictoryShares THB Mid

Risk-Adjusted Performance

Very Weak

Over the last 90 days VictoryShares THB Mid has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, VictoryShares THB 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

Very Weak

Over the last 90 days Nuveen ESG Large Cap has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, Nuveen ESG is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with VictoryShares THB and Nuveen ESG

The main advantage of trading using opposite VictoryShares THB and Nuveen ESG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VictoryShares THB 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 VictoryShares THB Mid 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.