Correlation Between Nuveen ESG and Invesco SP

Can any of the company-specific risk be diversified away by investing in both Nuveen ESG and Invesco SP 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 Invesco SP 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 Invesco SP 500, you can compare the effects of market volatilities on Nuveen ESG and Invesco SP 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 Invesco SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen ESG and Invesco SP.

Diversification Opportunities for Nuveen ESG and Invesco SP

0.93

Correlation Coefficient

Nuveen ESG  Invesco SP

Almost no diversification

The 3 months correlation between Nuveen and Invesco is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen ESG Large Cap and Invesco SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco SP 500 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 Invesco SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco SP 500 has no effect on the direction of Nuveen ESG i.e., Nuveen ESG and Invesco SP go up and down completely randomly.

Pair Corralation between Nuveen ESG and Invesco SP

Given the investment horizon of 90 days Nuveen ESG Large Cap is expected to generate 1.06 times more return on investment than Invesco SP. However, Nuveen ESG is 1.06 times more volatile than Invesco SP 500. It trades about 0.06 of its potential returns per unit of risk. Invesco SP 500 is currently generating about 0.06 per unit of risk. If you would invest  8,359  in Nuveen ESG Large Cap on October 11, 2024 and sell it today you would earn a total of  317.00  from holding Nuveen ESG Large Cap or generate 3.79% return on investment over 90 days.

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

Nuveen ESG Large Cap  vs.  Invesco SP 500

Nuveen ESG Large

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen ESG Large Cap are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, Nuveen ESG is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Invesco SP 500

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco SP 500 are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, Invesco SP is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Nuveen ESG and Invesco SP

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

The idea behind Nuveen ESG Large Cap and Invesco SP 500 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.