Correlation Between Nuveen New and Emerging Markets

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

Diversification Opportunities for Nuveen New and Emerging Markets

0.75

Correlation Coefficient

Nuveen New  Emerging Markets

Poor diversification

The 3 months correlation between Nuveen and Emerging is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen New Jersey and Emerging Markets Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets Growth 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 Emerging Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Markets Growth has no effect on the direction of Nuveen New i.e., Nuveen New and Emerging Markets go up and down completely randomly.

Pair Corralation between Nuveen New and Emerging Markets

Considering the 90-day investment horizon Nuveen New Jersey is expected to under-perform the Emerging Markets. But the fund apears to be less risky and, when comparing its historical volatility, Nuveen New Jersey is 1.35 times less risky than Emerging Markets. The fund trades about -0.45 of its potential returns per unit of risk. The Emerging Markets Growth is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest  690.00  in Emerging Markets Growth on September 29, 2024 and sell it today you would lose (14.00) from holding Emerging Markets Growth or give up 2.03% of portfolio value over 90 days.

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

Nuveen New Jersey  vs.  Emerging Markets Growth

Nuveen New Jersey

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nuveen New Jersey has generated negative risk-adjusted returns adding no value to fund investors. Even with latest fragile performance, the Fund's basic indicators remain steady and the new chaos on Wall Street may also be a sign of medium-term gains for the fund stakeholders.

Emerging Markets Growth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Emerging Markets Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Nuveen New and Emerging Markets

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

The idea behind Nuveen New Jersey and Emerging Markets Growth 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.