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 Small 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

0.83

Correlation Coefficient

Nuveen ESG  Nuveen ESG

Very poor diversification

The 3 months correlation between Nuveen and Nuveen is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen ESG Mid Cap and Nuveen ESG Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen ESG Small 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 Small 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 generate 0.94 times more return on investment than Nuveen ESG. However, Nuveen ESG Mid Cap is 1.07 times less risky than Nuveen ESG. It trades about 0.05 of its potential returns per unit of risk. Nuveen ESG Small Cap is currently generating about 0.04 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 Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Nuveen ESG Mid Cap  vs.  Nuveen ESG Small Cap

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.

Nuveen ESG Small

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nuveen ESG Small Cap has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Nuveen ESG is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

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 Small 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.