Correlation Between Nuveen ESG and IQ Candriam

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

Diversification Opportunities for Nuveen ESG and IQ Candriam

-0.66

Correlation Coefficient

Nuveen ESG  IQ Candriam

Excellent diversification

The 3 months correlation between Nuveen and IQSI is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen ESG Large Cap and IQ Candriam ESG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IQ Candriam ESG 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 IQ Candriam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IQ Candriam ESG has no effect on the direction of Nuveen ESG i.e., Nuveen ESG and IQ Candriam go up and down completely randomly.

Pair Corralation between Nuveen ESG and IQ Candriam

Given the investment horizon of 90 days Nuveen ESG Large Cap is expected to generate 0.85 times more return on investment than IQ Candriam. However, Nuveen ESG Large Cap is 1.17 times less risky than IQ Candriam. It trades about 0.15 of its potential returns per unit of risk. IQ Candriam ESG is currently generating about -0.06 per unit of risk. If you would invest  4,534  in Nuveen ESG Large Cap on September 13, 2024 and sell it today you would earn a total of  294.00  from holding Nuveen ESG Large Cap or generate 6.48% return on investment over 90 days.

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

Nuveen ESG Large Cap  vs.  IQ Candriam ESG

Nuveen ESG Large

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen ESG Large Cap are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak essential indicators, Nuveen ESG may actually be approaching a critical reversion point that can send shares even higher in January 2025.

IQ Candriam ESG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IQ Candriam ESG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, IQ Candriam is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Nuveen ESG and IQ Candriam

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

The idea behind Nuveen ESG Large Cap and IQ Candriam ESG 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .