Correlation Between Nuveen ESG and FT Vest

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

By analyzing existing cross correlation between Nuveen ESG Mid Cap and FT Vest Equity, you can compare the effects of market volatilities on Nuveen ESG and FT Vest 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 FT Vest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen ESG and FT Vest.

Diversification Opportunities for Nuveen ESG and FT Vest

0.76

Correlation Coefficient

Nuveen ESG  FT Vest

Poor diversification

The 3 months correlation between Nuveen and DHDG is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen ESG Mid Cap and FT Vest Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FT Vest Equity 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 Mid Cap are associated (or correlated) with FT Vest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FT Vest Equity has no effect on the direction of Nuveen ESG i.e., Nuveen ESG and FT Vest go up and down completely randomly.

Pair Corralation between Nuveen ESG and FT Vest

Given the investment horizon of 90 days Nuveen ESG is expected to generate 1.3 times less return on investment than FT Vest. In addition to that, Nuveen ESG is 1.11 times more volatile than FT Vest Equity. It trades about 0.02 of its total potential returns per unit of risk. FT Vest Equity is currently generating about 0.03 per unit of volatility. If you would invest  3,092  in FT Vest Equity on October 22, 2024 and sell it today you would earn a total of  10.00  from holding FT Vest Equity or generate 0.32% return on investment over 90 days.

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

Nuveen ESG Mid Cap  vs.  FT Vest Equity

Nuveen ESG Mid

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen ESG Mid Cap are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, Nuveen ESG may actually be approaching a critical reversion point that can send shares even higher in February 2025.

FT Vest Equity

Risk-Adjusted Performance

4 of 100

Modest

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

Pair Trading with Nuveen ESG and FT Vest

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

The idea behind Nuveen ESG Mid Cap and FT Vest Equity 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 CEOs Directory module to screen CEOs from public companies around the world.