Correlation Between SPDR SP and Nuveen ESG

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

By analyzing existing cross correlation between SPDR SP 400 and Nuveen ESG Mid Cap, you can compare the effects of market volatilities on SPDR SP 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 SPDR SP with a short position of Nuveen ESG. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and Nuveen ESG.

Diversification Opportunities for SPDR SP and Nuveen ESG

0.98

Correlation Coefficient

SPDR SP  Nuveen ESG

Almost no diversification

The 3 months correlation between SPDR and Nuveen is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 400 and Nuveen ESG Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen ESG Mid and SPDR SP 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 SPDR SP 400 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 Mid has no effect on the direction of SPDR SP i.e., SPDR SP and Nuveen ESG go up and down completely randomly.

Pair Corralation between SPDR SP and Nuveen ESG

Given the investment horizon of 90 days SPDR SP 400 is expected to under-perform the Nuveen ESG. In addition to that, SPDR SP is 1.18 times more volatile than Nuveen ESG Mid Cap. It trades about -0.03 of its total potential returns per unit of risk. Nuveen ESG Mid Cap is currently generating about -0.02 per unit of volatility. If you would invest  3,472  in Nuveen ESG Mid Cap on December 28, 2024 and sell it today you would lose (35.00) from holding Nuveen ESG Mid Cap or give up 1.01% of portfolio value over 90 days.

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

SPDR SP 400  vs.  Nuveen ESG Mid Cap

SPDR SP 400

Risk-Adjusted Performance

Very Weak

Over the last 90 days SPDR SP 400 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, SPDR SP is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Nuveen ESG Mid

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nuveen ESG Mid Cap has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable primary indicators, Nuveen ESG is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with SPDR SP and Nuveen ESG

The main advantage of trading using opposite SPDR SP and Nuveen ESG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP 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 SPDR SP 400 and Nuveen ESG Mid 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.