Correlation Between Nuveen ESG and Nuveen ESG

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

Diversification Opportunities for Nuveen ESG and Nuveen ESG

0.94

Correlation Coefficient

Nuveen ESG  Nuveen ESG

Almost no diversification

The 3 months correlation between Nuveen and Nuveen is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen ESG Mid Cap and Nuveen ESG Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen ESG Large 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 Nuveen ESG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen ESG Large has no effect on the direction of Nuveen ESG i.e., Nuveen ESG and Nuveen ESG go up and down completely randomly.

Pair Corralation between Nuveen ESG and Nuveen ESG

Given the investment horizon of 90 days Nuveen ESG Mid Cap is expected to under-perform the Nuveen ESG. But the etf apears to be less risky and, when comparing its historical volatility, Nuveen ESG Mid Cap is 1.03 times less risky than Nuveen ESG. The etf trades about -0.13 of its potential returns per unit of risk. The Nuveen ESG Large Cap is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  8,610  in Nuveen ESG Large Cap on December 19, 2024 and sell it today you would lose (699.00) from holding Nuveen ESG Large Cap or give up 8.12% of portfolio value over 90 days.

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

Nuveen ESG Mid Cap  vs.  Nuveen ESG Large Cap

Nuveen ESG Mid

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nuveen ESG Mid Cap has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Etf's primary indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the Exchange Traded Fund stockholders.

Nuveen ESG Large

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nuveen ESG Large Cap has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Etf's essential indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the Exchange Traded Fund stockholders.

Pair Trading with Nuveen ESG and Nuveen ESG

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

The idea behind Nuveen ESG Mid Cap and Nuveen ESG Large Cap 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.