Correlation Between Nuveen ESG and NuShares ETF

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

Diversification Opportunities for Nuveen ESG and NuShares ETF

-0.56

Correlation Coefficient

Nuveen ESG  NuShares ETF

Excellent diversification

The 3 months correlation between Nuveen and NuShares is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen ESG Mid Cap and NuShares ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NuShares ETF Trust 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 NuShares ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NuShares ETF Trust has no effect on the direction of Nuveen ESG i.e., Nuveen ESG and NuShares ETF go up and down completely randomly.

Pair Corralation between Nuveen ESG and NuShares ETF

Given the investment horizon of 90 days Nuveen ESG Mid Cap is expected to generate 0.93 times more return on investment than NuShares ETF. However, Nuveen ESG Mid Cap is 1.08 times less risky than NuShares ETF. It trades about 0.05 of its potential returns per unit of risk. NuShares ETF Trust is currently generating about 0.02 per unit of risk. If you would invest  3,730  in Nuveen ESG Mid Cap on October 11, 2024 and sell it today you would earn a total of  1,040  from holding Nuveen ESG Mid Cap or generate 27.88% return on investment over 90 days.

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

Nuveen ESG Mid Cap  vs.  NuShares ETF Trust

Nuveen ESG Mid

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen ESG Mid Cap are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable primary indicators, Nuveen ESG is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

NuShares ETF Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NuShares ETF Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, NuShares ETF is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Nuveen ESG and NuShares ETF

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

The idea behind Nuveen ESG Mid Cap and NuShares ETF Trust 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.