Correlation Between Nuveen Dividend and SHP ETF

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

By analyzing existing cross correlation between Nuveen Dividend Growth and SHP ETF Trust, you can compare the effects of market volatilities on Nuveen Dividend and SHP ETF 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 Dividend with a short position of SHP ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen Dividend and SHP ETF.

Diversification Opportunities for Nuveen Dividend and SHP ETF

0.66

Correlation Coefficient

Nuveen Dividend  SHP ETF

Poor diversification

The 3 months correlation between Nuveen and SHP is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Dividend Growth and SHP ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHP ETF Trust and Nuveen Dividend 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 Dividend Growth are associated (or correlated) with SHP ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SHP ETF Trust has no effect on the direction of Nuveen Dividend i.e., Nuveen Dividend and SHP ETF go up and down completely randomly.

Pair Corralation between Nuveen Dividend and SHP ETF

Given the investment horizon of 90 days Nuveen Dividend Growth is expected to under-perform the SHP ETF. But the etf apears to be less risky and, when comparing its historical volatility, Nuveen Dividend Growth is 1.15 times less risky than SHP ETF. The etf trades about -0.14 of its potential returns per unit of risk. The SHP ETF Trust is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  2,894  in SHP ETF Trust on October 8, 2024 and sell it today you would lose (38.00) from holding SHP ETF Trust or give up 1.31% of portfolio value over 90 days.

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

Nuveen Dividend Growth  vs.  SHP ETF Trust

Nuveen Dividend Growth

Risk-Adjusted Performance

0 of 100

Very Weak

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

SHP ETF Trust

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SHP ETF Trust are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, SHP ETF is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Nuveen Dividend and SHP ETF

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

The idea behind Nuveen Dividend Growth and SHP ETF Trust 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.