Correlation Between MidCap Financial and Nuveen Core

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

By analyzing existing cross correlation between MidCap Financial Investment and Nuveen Core Plus, you can compare the effects of market volatilities on MidCap Financial and Nuveen Core 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 MidCap Financial with a short position of Nuveen Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of MidCap Financial and Nuveen Core.

Diversification Opportunities for MidCap Financial and Nuveen Core

-0.2

Correlation Coefficient

MidCap Financial  Nuveen Core

Good diversification

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

Pair Corralation between MidCap Financial and Nuveen Core

Given the investment horizon of 90 days MidCap Financial Investment is expected to generate 1.4 times more return on investment than Nuveen Core. However, MidCap Financial is 1.4 times more volatile than Nuveen Core Plus. It trades about 0.1 of its potential returns per unit of risk. Nuveen Core Plus is currently generating about 0.05 per unit of risk. If you would invest  1,350  in MidCap Financial Investment on September 1, 2024 and sell it today you would earn a total of  67.00  from holding MidCap Financial Investment or generate 4.96% return on investment over 90 days.

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

MidCap Financial Investment  vs.  Nuveen Core Plus

MidCap Financial Inv

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MidCap Financial Investment are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound forward indicators, MidCap Financial is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Nuveen Core Plus

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Core Plus are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, Nuveen Core is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with MidCap Financial and Nuveen Core

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

The idea behind MidCap Financial Investment and Nuveen Core Plus 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.