Correlation Between Nuveen New and Torrent Capital

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

Diversification Opportunities for Nuveen New and Torrent Capital

0.28

Correlation Coefficient

Nuveen New  Torrent Capital

Modest diversification

The 3 months correlation between Nuveen and Torrent is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen New Jersey and Torrent Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Torrent Capital 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 Torrent Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Torrent Capital has no effect on the direction of Nuveen New i.e., Nuveen New and Torrent Capital go up and down completely randomly.

Pair Corralation between Nuveen New and Torrent Capital

Considering the 90-day investment horizon Nuveen New Jersey is expected to generate 0.42 times more return on investment than Torrent Capital. However, Nuveen New Jersey is 2.38 times less risky than Torrent Capital. It trades about 0.0 of its potential returns per unit of risk. Torrent Capital is currently generating about -0.02 per unit of risk. If you would invest  1,174  in Nuveen New Jersey on December 29, 2024 and sell it today you would lose (2.00) from holding Nuveen New Jersey or give up 0.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.31%
Values	Daily Returns

Nuveen New Jersey  vs.  Torrent Capital

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.

Torrent Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Torrent Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Torrent Capital is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Nuveen New and Torrent Capital

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

The idea behind Nuveen New Jersey and Torrent Capital 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.