Correlation Between Nuveen Dividend and Nuveen ESG

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

Diversification Opportunities for Nuveen Dividend and Nuveen ESG

0.8

Correlation Coefficient

Nuveen Dividend  Nuveen ESG

Very poor diversification

The 3 months correlation between Nuveen and Nuveen is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Dividend Growth and Nuveen ESG Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen ESG Mid 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 Nuveen ESG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen ESG Mid has no effect on the direction of Nuveen Dividend i.e., Nuveen Dividend and Nuveen ESG go up and down completely randomly.

Pair Corralation between Nuveen Dividend and Nuveen ESG

Given the investment horizon of 90 days Nuveen Dividend Growth is expected to generate 0.6 times more return on investment than Nuveen ESG. However, Nuveen Dividend Growth is 1.68 times less risky than Nuveen ESG. It trades about -0.06 of its potential returns per unit of risk. Nuveen ESG Mid Cap is currently generating about -0.14 per unit of risk. If you would invest  3,290  in Nuveen Dividend Growth on December 21, 2024 and sell it today you would lose (95.10) from holding Nuveen Dividend Growth or give up 2.89% of portfolio value over 90 days.

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

Nuveen Dividend Growth  vs.  Nuveen ESG Mid Cap

Nuveen Dividend Growth

Risk-Adjusted Performance

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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

Nuveen ESG Mid

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nuveen ESG Mid Cap has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Etf's primary indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the Exchange Traded Fund stockholders.

Pair Trading with Nuveen Dividend and Nuveen ESG

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

The idea behind Nuveen Dividend Growth and Nuveen ESG Mid Cap 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.