Correlation Between Nasdaq and Nuveen Select

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

By analyzing existing cross correlation between Nasdaq Inc and Nuveen Select Maturities, you can compare the effects of market volatilities on Nasdaq and Nuveen Select 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 Nasdaq with a short position of Nuveen Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and Nuveen Select.

Diversification Opportunities for Nasdaq and Nuveen Select

0.65

Correlation Coefficient

Nasdaq  Nuveen Select

Poor diversification

The 3 months correlation between Nasdaq and Nuveen is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Nuveen Select Maturities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Select Maturities and Nasdaq 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 Nasdaq Inc are associated (or correlated) with Nuveen Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Select Maturities has no effect on the direction of Nasdaq i.e., Nasdaq and Nuveen Select go up and down completely randomly.

Pair Corralation between Nasdaq and Nuveen Select

Given the investment horizon of 90 days Nasdaq Inc is expected to under-perform the Nuveen Select. In addition to that, Nasdaq is 2.99 times more volatile than Nuveen Select Maturities. It trades about -0.1 of its total potential returns per unit of risk. Nuveen Select Maturities is currently generating about 0.32 per unit of volatility. If you would invest  900.00  in Nuveen Select Maturities on December 4, 2024 and sell it today you would earn a total of  28.00  from holding Nuveen Select Maturities or generate 3.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Nasdaq Inc  vs.  Nuveen Select Maturities

Nasdaq Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Nasdaq is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Nuveen Select Maturities

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Select Maturities are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of very healthy forward indicators, Nuveen Select is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Nasdaq and Nuveen Select

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

The idea behind Nasdaq Inc and Nuveen Select Maturities 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.

Check out your portfolio center.

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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.