Correlation Between Nuveen California and BlackRock Floating

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

By analyzing existing cross correlation between Nuveen California Select and BlackRock Floating Rate, you can compare the effects of market volatilities on Nuveen California and BlackRock Floating 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 California with a short position of BlackRock Floating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen California and BlackRock Floating.

Diversification Opportunities for Nuveen California and BlackRock Floating

0.3

Correlation Coefficient

Nuveen California  BlackRock Floating

Weak diversification

The 3 months correlation between Nuveen and BlackRock is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen California Select and BlackRock Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock Floating Rate and Nuveen California 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 California Select are associated (or correlated) with BlackRock Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock Floating Rate has no effect on the direction of Nuveen California i.e., Nuveen California and BlackRock Floating go up and down completely randomly.

Pair Corralation between Nuveen California and BlackRock Floating

Considering the 90-day investment horizon Nuveen California Select is expected to generate 0.82 times more return on investment than BlackRock Floating. However, Nuveen California Select is 1.21 times less risky than BlackRock Floating. It trades about 0.08 of its potential returns per unit of risk. BlackRock Floating Rate is currently generating about -0.02 per unit of risk. If you would invest  1,285  in Nuveen California Select on December 29, 2024 and sell it today you would earn a total of  25.00  from holding Nuveen California Select or generate 1.95% return on investment over 90 days.

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

Nuveen California Select  vs.  BlackRock Floating Rate

Nuveen California Select

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen California Select are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Nuveen California is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

BlackRock Floating Rate

Risk-Adjusted Performance

Very Weak

Over the last 90 days BlackRock Floating Rate has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, BlackRock Floating is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Nuveen California and BlackRock Floating

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

The idea behind Nuveen California Select and BlackRock Floating Rate 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.