Correlation Between Nuveen Senior and Brookfield Business

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

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

Diversification Opportunities for Nuveen Senior and Brookfield Business

0.36

Correlation Coefficient

Nuveen Senior  Brookfield Business

Weak diversification

The 3 months correlation between Nuveen and Brookfield is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Senior Income and Brookfield Business Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Business Corp and Nuveen Senior 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 Senior Income are associated (or correlated) with Brookfield Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Business Corp has no effect on the direction of Nuveen Senior i.e., Nuveen Senior and Brookfield Business go up and down completely randomly.

Pair Corralation between Nuveen Senior and Brookfield Business

If you would invest  2,154  in Brookfield Business Corp on September 5, 2024 and sell it today you would earn a total of  586.00  from holding Brookfield Business Corp or generate 27.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

Nuveen Senior Income  vs.  Brookfield Business Corp

Nuveen Senior Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nuveen Senior Income has generated negative risk-adjusted returns adding no value to fund investors. Despite quite persistent basic indicators, Nuveen Senior is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Brookfield Business Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Business Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Brookfield Business exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nuveen Senior and Brookfield Business

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

The idea behind Nuveen Senior Income and Brookfield Business 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.