Correlation Between Nuveen California and Guidemark

Can any of the company-specific risk be diversified away by investing in both Nuveen California and Guidemark 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 Guidemark 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 Guidemark E Fixed, you can compare the effects of market volatilities on Nuveen California and Guidemark 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 Guidemark. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen California and Guidemark.

Diversification Opportunities for Nuveen California and Guidemark

0.57

Correlation Coefficient

Nuveen California  Guidemark

Very weak diversification

The 3 months correlation between Nuveen and Guidemark is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen California High and Guidemark E Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidemark E Fixed 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 Guidemark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidemark E Fixed has no effect on the direction of Nuveen California i.e., Nuveen California and Guidemark go up and down completely randomly.

Pair Corralation between Nuveen California and Guidemark

Assuming the 90 days horizon Nuveen California High is expected to generate 1.4 times more return on investment than Guidemark. However, Nuveen California is 1.4 times more volatile than Guidemark E Fixed. It trades about 0.01 of its potential returns per unit of risk. Guidemark E Fixed is currently generating about -0.04 per unit of risk. If you would invest  788.00  in Nuveen California High on October 23, 2024 and sell it today you would earn a total of  2.00  from holding Nuveen California High or generate 0.25% return on investment over 90 days.

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

Nuveen California High  vs.  Guidemark E Fixed

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.

Guidemark E Fixed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guidemark E Fixed has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Guidemark 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 Guidemark

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

The idea behind Nuveen California High and Guidemark E Fixed 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 Anywhere module to track or share privately all of your investments from the convenience of any device.