Correlation Between Nuveen Variable and Virtus AllianzGI

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

By analyzing existing cross correlation between Nuveen Variable Rate and Virtus AllianzGI Convertible, you can compare the effects of market volatilities on Nuveen Variable and Virtus AllianzGI 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 Variable with a short position of Virtus AllianzGI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen Variable and Virtus AllianzGI.

Diversification Opportunities for Nuveen Variable and Virtus AllianzGI

0.64

Correlation Coefficient

Nuveen Variable  Virtus AllianzGI

Poor diversification

The 3 months correlation between Nuveen and Virtus is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Variable Rate and Virtus AllianzGI Convertible in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus AllianzGI Con and Nuveen Variable 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 Variable Rate are associated (or correlated) with Virtus AllianzGI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus AllianzGI Con has no effect on the direction of Nuveen Variable i.e., Nuveen Variable and Virtus AllianzGI go up and down completely randomly.

Pair Corralation between Nuveen Variable and Virtus AllianzGI

Given the investment horizon of 90 days Nuveen Variable is expected to generate 1.57 times less return on investment than Virtus AllianzGI. But when comparing it to its historical volatility, Nuveen Variable Rate is 1.06 times less risky than Virtus AllianzGI. It trades about 0.1 of its potential returns per unit of risk. Virtus AllianzGI Convertible is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  2,094  in Virtus AllianzGI Convertible on December 20, 2024 and sell it today you would earn a total of  115.00  from holding Virtus AllianzGI Convertible or generate 5.49% return on investment over 90 days.

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

Nuveen Variable Rate  vs.  Virtus AllianzGI Convertible

Nuveen Variable Rate

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Variable Rate are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Nuveen Variable is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Virtus AllianzGI Con

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus AllianzGI Convertible are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Virtus AllianzGI is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nuveen Variable and Virtus AllianzGI

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

The idea behind Nuveen Variable Rate and Virtus AllianzGI Convertible 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.