Correlation Between Nuveen Core and New Germany

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

By analyzing existing cross correlation between Nuveen Core Plus and New Germany Closed, you can compare the effects of market volatilities on Nuveen Core and New Germany 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 Core with a short position of New Germany. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen Core and New Germany.

Diversification Opportunities for Nuveen Core and New Germany

0.76

Correlation Coefficient

Nuveen Core  New Germany

Poor diversification

The 3 months correlation between Nuveen and New is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Core Plus and New Germany Closed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Germany Closed and Nuveen Core 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 Core Plus are associated (or correlated) with New Germany. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Germany Closed has no effect on the direction of Nuveen Core i.e., Nuveen Core and New Germany go up and down completely randomly.

Pair Corralation between Nuveen Core and New Germany

Given the investment horizon of 90 days Nuveen Core is expected to generate 6.26 times less return on investment than New Germany. But when comparing it to its historical volatility, Nuveen Core Plus is 2.37 times less risky than New Germany. It trades about 0.11 of its potential returns per unit of risk. New Germany Closed is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  795.00  in New Germany Closed on December 26, 2024 and sell it today you would earn a total of  219.00  from holding New Germany Closed or generate 27.55% return on investment over 90 days.

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

Nuveen Core Plus  vs.  New Germany Closed

Nuveen Core Plus

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Core Plus are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, Nuveen Core is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

New Germany Closed

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in New Germany Closed are ranked lower than 23 (%) of all funds and portfolios of funds over the last 90 days. Despite nearly uncertain technical and fundamental indicators, New Germany reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nuveen Core and New Germany

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

The idea behind Nuveen Core Plus and New Germany Closed 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.