Correlation Between Nuveen California and Malaga Financial

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

Diversification Opportunities for Nuveen California and Malaga Financial

-0.21

Correlation Coefficient

Nuveen California  Malaga Financial

Very good diversification

The 3 months correlation between Nuveen and Malaga is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen California Select and Malaga Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Malaga Financial 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 Malaga Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Malaga Financial has no effect on the direction of Nuveen California i.e., Nuveen California and Malaga Financial go up and down completely randomly.

Pair Corralation between Nuveen California and Malaga Financial

Considering the 90-day investment horizon Nuveen California Select is expected to generate 0.24 times more return on investment than Malaga Financial. However, Nuveen California Select is 4.15 times less risky than Malaga Financial. It trades about 0.08 of its potential returns per unit of risk. Malaga Financial is currently generating about -0.06 per unit of risk. If you would invest  1,285  in Nuveen California Select on December 28, 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 Against
Strength	Insignificant
Accuracy	95.08%
Values	Daily Returns

Nuveen California Select  vs.  Malaga Financial

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.

Malaga Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Malaga Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Nuveen California and Malaga Financial

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

The idea behind Nuveen California Select and Malaga Financial 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.