Correlation Between Nuveen New and Rock Oak

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

By analyzing existing cross correlation between Nuveen New Jersey and Rock Oak E, you can compare the effects of market volatilities on Nuveen New and Rock Oak 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 New with a short position of Rock Oak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen New and Rock Oak.

Diversification Opportunities for Nuveen New and Rock Oak

0.32

Correlation Coefficient

Nuveen New  Rock Oak

Weak diversification

The 3 months correlation between Nuveen and Rock is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen New Jersey and Rock Oak E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rock Oak E and Nuveen New 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 New Jersey are associated (or correlated) with Rock Oak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rock Oak E has no effect on the direction of Nuveen New i.e., Nuveen New and Rock Oak go up and down completely randomly.

Pair Corralation between Nuveen New and Rock Oak

Considering the 90-day investment horizon Nuveen New Jersey is expected to under-perform the Rock Oak. But the fund apears to be less risky and, when comparing its historical volatility, Nuveen New Jersey is 1.5 times less risky than Rock Oak. The fund trades about -0.01 of its potential returns per unit of risk. The Rock Oak E is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,924  in Rock Oak E on December 28, 2024 and sell it today you would earn a total of  1.00  from holding Rock Oak E or generate 0.05% return on investment over 90 days.

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

Nuveen New Jersey  vs.  Rock Oak E

Nuveen New Jersey

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nuveen New Jersey has generated negative risk-adjusted returns adding no value to fund investors. Even with relatively steady basic indicators, Nuveen New is not utilizing all of its potentials. The current stock price chaos, may contribute to medium-term losses for the stakeholders.

Rock Oak E

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rock Oak E has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Rock Oak 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 New and Rock Oak

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

The idea behind Nuveen New Jersey and Rock Oak E 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.