Correlation Between Nuveen Senior and Nuveen Mortgage

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

Diversification Opportunities for Nuveen Senior and Nuveen Mortgage

0.14

Correlation Coefficient

Nuveen Senior  Nuveen Mortgage

Average diversification

The 3 months correlation between Nuveen and Nuveen is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Senior Income and Nuveen Mortgage Opportunity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Mortgage Oppo 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 Nuveen Mortgage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Mortgage Oppo has no effect on the direction of Nuveen Senior i.e., Nuveen Senior and Nuveen Mortgage go up and down completely randomly.

Pair Corralation between Nuveen Senior and Nuveen Mortgage

Considering the 90-day investment horizon Nuveen Senior Income is expected to generate 0.18 times more return on investment than Nuveen Mortgage. However, Nuveen Senior Income is 5.63 times less risky than Nuveen Mortgage. It trades about 0.87 of its potential returns per unit of risk. Nuveen Mortgage Opportunity is currently generating about 0.12 per unit of risk. If you would invest  454.00  in Nuveen Senior Income on September 12, 2024 and sell it today you would earn a total of  2.00  from holding Nuveen Senior Income or generate 0.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	1.14%
Values	Daily Returns

Nuveen Senior Income  vs.  Nuveen Mortgage Opportunity

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.

Nuveen Mortgage Oppo

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Mortgage Opportunity are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak essential indicators, Nuveen Mortgage may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Nuveen Senior and Nuveen Mortgage

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

The idea behind Nuveen Senior Income and Nuveen Mortgage Opportunity 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.