Correlation Between Nuveen Pennsylvania and SWK Holdings

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

By analyzing existing cross correlation between Nuveen Pennsylvania Quality and SWK Holdings Corp, you can compare the effects of market volatilities on Nuveen Pennsylvania and SWK Holdings 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 Pennsylvania with a short position of SWK Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen Pennsylvania and SWK Holdings.

Diversification Opportunities for Nuveen Pennsylvania and SWK Holdings

0.5

Correlation Coefficient

Nuveen Pennsylvania  SWK Holdings

Very weak diversification

The 3 months correlation between Nuveen and SWK is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Pennsylvania Quality and SWK Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SWK Holdings Corp and Nuveen Pennsylvania 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 Pennsylvania Quality are associated (or correlated) with SWK Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SWK Holdings Corp has no effect on the direction of Nuveen Pennsylvania i.e., Nuveen Pennsylvania and SWK Holdings go up and down completely randomly.

Pair Corralation between Nuveen Pennsylvania and SWK Holdings

Considering the 90-day investment horizon Nuveen Pennsylvania Quality is expected to under-perform the SWK Holdings. But the fund apears to be less risky and, when comparing its historical volatility, Nuveen Pennsylvania Quality is 1.74 times less risky than SWK Holdings. The fund trades about -0.3 of its potential returns per unit of risk. The SWK Holdings Corp is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  1,647  in SWK Holdings Corp on October 8, 2024 and sell it today you would lose (43.00) from holding SWK Holdings Corp or give up 2.61% of portfolio value over 90 days.

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

Nuveen Pennsylvania Quality  vs.  SWK Holdings Corp

Nuveen Pennsylvania

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nuveen Pennsylvania Quality has generated negative risk-adjusted returns adding no value to fund investors. Even with latest unfluctuating performance, the Fund's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the fund retail investors.

SWK Holdings Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SWK Holdings Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward-looking signals, SWK Holdings is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Nuveen Pennsylvania and SWK Holdings

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

The idea behind Nuveen Pennsylvania Quality and SWK Holdings Corp 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.