Correlation Between Nuveen California and Columbia

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

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

Diversification Opportunities for Nuveen California and Columbia

0.69

Correlation Coefficient

Nuveen California  Columbia

Poor diversification

The 3 months correlation between Nuveen and Columbia is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen California High and Columbia Treasury Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Treasury Index and Nuveen California 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 California High are associated (or correlated) with Columbia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Treasury Index has no effect on the direction of Nuveen California i.e., Nuveen California and Columbia go up and down completely randomly.

Pair Corralation between Nuveen California and Columbia

Assuming the 90 days horizon Nuveen California High is expected to under-perform the Columbia. In addition to that, Nuveen California is 1.43 times more volatile than Columbia Treasury Index. It trades about -0.35 of its total potential returns per unit of risk. Columbia Treasury Index is currently generating about -0.44 per unit of volatility. If you would invest  993.00  in Columbia Treasury Index on October 8, 2024 and sell it today you would lose (20.00) from holding Columbia Treasury Index or give up 2.01% of portfolio value over 90 days.

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

Nuveen California High  vs.  Columbia Treasury Index

Nuveen California High

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nuveen California High has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Nuveen California is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Columbia Treasury Index

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Columbia Treasury Index has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Columbia is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nuveen California and Columbia

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

The idea behind Nuveen California High and Columbia Treasury Index 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.