Correlation Between Nuveen California and Pimco New

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

Diversification Opportunities for Nuveen California and Pimco New

0.89

Correlation Coefficient

Nuveen California  Pimco New

Very poor diversification

The 3 months correlation between Nuveen and Pimco is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen California Select and Pimco New York in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco New York 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 Pimco New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco New York has no effect on the direction of Nuveen California i.e., Nuveen California and Pimco New go up and down completely randomly.

Pair Corralation between Nuveen California and Pimco New

Considering the 90-day investment horizon Nuveen California Select is expected to under-perform the Pimco New. In addition to that, Nuveen California is 1.33 times more volatile than Pimco New York. It trades about -0.1 of its total potential returns per unit of risk. Pimco New York is currently generating about -0.12 per unit of volatility. If you would invest  818.00  in Pimco New York on September 13, 2024 and sell it today you would lose (32.00) from holding Pimco New York or give up 3.91% of portfolio value over 90 days.

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

Nuveen California Select  vs.  Pimco New York

Nuveen California Select

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nuveen California Select has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Pimco New York

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pimco New York has generated negative risk-adjusted returns adding no value to fund investors. Despite nearly stable basic indicators, Pimco New is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Nuveen California and Pimco New

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

The idea behind Nuveen California Select and Pimco New York 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.