Correlation Between Nuveen Strategic and Transamerica Emerging

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

Diversification Opportunities for Nuveen Strategic and Transamerica Emerging

0.86

Correlation Coefficient

Nuveen Strategic  Transamerica Emerging

Very poor diversification

The 3 months correlation between Nuveen and Transamerica is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Strategic Municipal and Transamerica Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Emerging 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 Transamerica Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Emerging has no effect on the direction of Nuveen Strategic i.e., Nuveen Strategic and Transamerica Emerging go up and down completely randomly.

Pair Corralation between Nuveen Strategic and Transamerica Emerging

Assuming the 90 days horizon Nuveen Strategic Municipal is expected to generate 0.51 times more return on investment than Transamerica Emerging. However, Nuveen Strategic Municipal is 1.97 times less risky than Transamerica Emerging. It trades about -0.04 of its potential returns per unit of risk. Transamerica Emerging Markets is currently generating about -0.17 per unit of risk. If you would invest  999.00  in Nuveen Strategic Municipal on December 23, 2024 and sell it today you would lose (2.00) from holding Nuveen Strategic Municipal or give up 0.2% of portfolio value over 90 days.

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

Nuveen Strategic Municipal  vs.  Transamerica Emerging Markets

Nuveen Strategic Mun

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Strategic Municipal are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. 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.

Transamerica Emerging

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Transamerica Emerging Markets are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Transamerica Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nuveen Strategic and Transamerica Emerging

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

The idea behind Nuveen Strategic Municipal and Transamerica Emerging Markets 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.