Correlation Between Nuveen Short-duration and Old Westbury

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

By analyzing existing cross correlation between Nuveen Short Duration High and Old Westbury Large, you can compare the effects of market volatilities on Nuveen Short-duration and Old Westbury 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 Short-duration with a short position of Old Westbury. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen Short-duration and Old Westbury.

Diversification Opportunities for Nuveen Short-duration and Old Westbury

0.51

Correlation Coefficient

Nuveen Short-duration  Old Westbury

Very weak diversification

The 3 months correlation between Nuveen and Old is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Short Duration High and Old Westbury Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Westbury Large and Nuveen Short-duration 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 Short Duration High are associated (or correlated) with Old Westbury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Westbury Large has no effect on the direction of Nuveen Short-duration i.e., Nuveen Short-duration and Old Westbury go up and down completely randomly.

Pair Corralation between Nuveen Short-duration and Old Westbury

Assuming the 90 days horizon Nuveen Short-duration is expected to generate 2.29 times less return on investment than Old Westbury. But when comparing it to its historical volatility, Nuveen Short Duration High is 3.92 times less risky than Old Westbury. It trades about 0.11 of its potential returns per unit of risk. Old Westbury Large is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,643  in Old Westbury Large on October 4, 2024 and sell it today you would earn a total of  340.00  from holding Old Westbury Large or generate 20.69% return on investment over 90 days.

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

Nuveen Short Duration High  vs.  Old Westbury Large

Nuveen Short Duration

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nuveen Short Duration High has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Nuveen Short-duration is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Old Westbury Large

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Old Westbury Large has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Old Westbury is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nuveen Short-duration and Old Westbury

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

The idea behind Nuveen Short Duration High and Old Westbury Large 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.