Correlation Between Nuveen New and Gabelli Equity

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

By analyzing existing cross correlation between Nuveen New York and The Gabelli Equity, you can compare the effects of market volatilities on Nuveen New and Gabelli Equity 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 Nuveen New with a short position of Gabelli Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen New and Gabelli Equity.

Diversification Opportunities for Nuveen New and Gabelli Equity

0.02

Correlation Coefficient

Nuveen New  Gabelli Equity

Significant diversification

The 3 months correlation between Nuveen and Gabelli is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen New York and The Gabelli Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Equity and Nuveen New 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 Nuveen New York are associated (or correlated) with Gabelli Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli Equity has no effect on the direction of Nuveen New i.e., Nuveen New and Gabelli Equity go up and down completely randomly.

Pair Corralation between Nuveen New and Gabelli Equity

Considering the 90-day investment horizon Nuveen New York is expected to generate 0.75 times more return on investment than Gabelli Equity. However, Nuveen New York is 1.34 times less risky than Gabelli Equity. It trades about 0.1 of its potential returns per unit of risk. The Gabelli Equity is currently generating about -0.13 per unit of risk. If you would invest  1,140  in Nuveen New York on November 29, 2024 and sell it today you would earn a total of  39.00  from holding Nuveen New York or generate 3.42% return on investment over 90 days.

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

Nuveen New York  vs.  The Gabelli Equity

Nuveen New York

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen New York are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of very healthy basic indicators, Nuveen New is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Gabelli Equity

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Gabelli Equity has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Preferred Stock's fundamental drivers remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Nuveen New and Gabelli Equity

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

The idea behind Nuveen New York and The Gabelli Equity 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.