Correlation Between Nuveen Strategic and Diamond Hill

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

By analyzing existing cross correlation between Nuveen Strategic Municipal and Diamond Hill Large, you can compare the effects of market volatilities on Nuveen Strategic and Diamond Hill 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 Strategic with a short position of Diamond Hill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen Strategic and Diamond Hill.

Diversification Opportunities for Nuveen Strategic and Diamond Hill

0.19

Correlation Coefficient

Nuveen Strategic  Diamond Hill

Average diversification

The 3 months correlation between Nuveen and Diamond is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Strategic Municipal and Diamond Hill Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamond Hill Large and Nuveen Strategic 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 Strategic Municipal are associated (or correlated) with Diamond Hill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diamond Hill Large has no effect on the direction of Nuveen Strategic i.e., Nuveen Strategic and Diamond Hill go up and down completely randomly.

Pair Corralation between Nuveen Strategic and Diamond Hill

Assuming the 90 days horizon Nuveen Strategic is expected to generate 1.88 times less return on investment than Diamond Hill. But when comparing it to its historical volatility, Nuveen Strategic Municipal is 3.51 times less risky than Diamond Hill. It trades about 0.08 of its potential returns per unit of risk. Diamond Hill Large is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,177  in Diamond Hill Large on October 9, 2024 and sell it today you would earn a total of  98.00  from holding Diamond Hill Large or generate 8.33% return on investment over 90 days.

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

Nuveen Strategic Municipal  vs.  Diamond Hill Large

Nuveen Strategic Mun

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nuveen Strategic Municipal has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Nuveen Strategic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Diamond Hill Large

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Diamond Hill Large has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Nuveen Strategic and Diamond Hill

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

The idea behind Nuveen Strategic Municipal and Diamond Hill Large 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.

Check out your portfolio center.

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 Stocks Directory module to find actively traded stocks across global markets.