Correlation Between Nuveen ESG and IShares Dividend

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

Diversification Opportunities for Nuveen ESG and IShares Dividend

0.8

Correlation Coefficient

Nuveen ESG  IShares Dividend

Very poor diversification

The 3 months correlation between Nuveen and IShares is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen ESG Large Cap and iShares Dividend and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Dividend 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 IShares Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Dividend has no effect on the direction of Nuveen ESG i.e., Nuveen ESG and IShares Dividend go up and down completely randomly.

Pair Corralation between Nuveen ESG and IShares Dividend

Given the investment horizon of 90 days Nuveen ESG Large Cap is expected to generate 1.06 times more return on investment than IShares Dividend. However, Nuveen ESG is 1.06 times more volatile than iShares Dividend and. It trades about 0.09 of its potential returns per unit of risk. iShares Dividend and is currently generating about 0.07 per unit of risk. If you would invest  3,238  in Nuveen ESG Large Cap on October 7, 2024 and sell it today you would earn a total of  1,366  from holding Nuveen ESG Large Cap or generate 42.19% return on investment over 90 days.

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

Nuveen ESG Large Cap  vs.  iShares Dividend and

Nuveen ESG Large

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen ESG Large Cap are ranked lower than 5 (%) 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.

iShares Dividend

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Dividend and has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, IShares Dividend is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nuveen ESG and IShares Dividend

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

The idea behind Nuveen ESG Large Cap and iShares Dividend and 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.