Correlation Between Nuveen ESG and Tidal Trust

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

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

Diversification Opportunities for Nuveen ESG and Tidal Trust

0.54

Correlation Coefficient

Nuveen ESG  Tidal Trust

Very weak diversification

The 3 months correlation between Nuveen and Tidal is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen ESG Large Cap and Tidal Trust II in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tidal Trust II and Nuveen ESG 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 ESG Large Cap are associated (or correlated) with Tidal Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tidal Trust II has no effect on the direction of Nuveen ESG i.e., Nuveen ESG and Tidal Trust go up and down completely randomly.

Pair Corralation between Nuveen ESG and Tidal Trust

Given the investment horizon of 90 days Nuveen ESG Large Cap is expected to generate 0.95 times more return on investment than Tidal Trust. However, Nuveen ESG Large Cap is 1.06 times less risky than Tidal Trust. It trades about -0.02 of its potential returns per unit of risk. Tidal Trust II is currently generating about -0.16 per unit of risk. If you would invest  4,699  in Nuveen ESG Large Cap on October 22, 2024 and sell it today you would lose (32.20) from holding Nuveen ESG Large Cap or give up 0.69% of portfolio value over 90 days.

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

Nuveen ESG Large Cap  vs.  Tidal Trust II

Nuveen ESG Large

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen ESG Large Cap are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, Nuveen ESG is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Tidal Trust II

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tidal Trust II are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Tidal Trust may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Nuveen ESG and Tidal Trust

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

The idea behind Nuveen ESG Large Cap and Tidal Trust II 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.