Correlation Between Nuveen Arizona and Flow Capital

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

By analyzing existing cross correlation between Nuveen Arizona Quality and Flow Capital Corp, you can compare the effects of market volatilities on Nuveen Arizona and Flow Capital 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 Arizona with a short position of Flow Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen Arizona and Flow Capital.

Diversification Opportunities for Nuveen Arizona and Flow Capital

-0.13

Correlation Coefficient

Nuveen Arizona  Flow Capital

Good diversification

The 3 months correlation between Nuveen and Flow is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Arizona Quality and Flow Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flow Capital Corp and Nuveen Arizona 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 Arizona Quality are associated (or correlated) with Flow Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flow Capital Corp has no effect on the direction of Nuveen Arizona i.e., Nuveen Arizona and Flow Capital go up and down completely randomly.

Pair Corralation between Nuveen Arizona and Flow Capital

Considering the 90-day investment horizon Nuveen Arizona Quality is expected to generate 3.75 times more return on investment than Flow Capital. However, Nuveen Arizona is 3.75 times more volatile than Flow Capital Corp. It trades about 0.09 of its potential returns per unit of risk. Flow Capital Corp is currently generating about -0.12 per unit of risk. If you would invest  1,154  in Nuveen Arizona Quality on September 17, 2024 and sell it today you would earn a total of  49.00  from holding Nuveen Arizona Quality or generate 4.25% return on investment over 90 days.

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

Nuveen Arizona Quality  vs.  Flow Capital Corp

Nuveen Arizona Quality

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Arizona Quality are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Nuveen Arizona is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Flow Capital Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Flow Capital Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Flow Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Nuveen Arizona and Flow Capital

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

The idea behind Nuveen Arizona Quality and Flow Capital Corp 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.