Correlation Between Sprott Physical and Nuveen Floating

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

By analyzing existing cross correlation between Sprott Physical Gold and Nuveen Floating Rate, you can compare the effects of market volatilities on Sprott Physical and Nuveen Floating 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 Sprott Physical with a short position of Nuveen Floating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprott Physical and Nuveen Floating.

Diversification Opportunities for Sprott Physical and Nuveen Floating

-0.39

Correlation Coefficient

Sprott Physical  Nuveen Floating

Very good diversification

The 3 months correlation between Sprott and Nuveen is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Physical Gold and Nuveen Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Floating Rate and Sprott Physical 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 Sprott Physical Gold are associated (or correlated) with Nuveen Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Floating Rate has no effect on the direction of Sprott Physical i.e., Sprott Physical and Nuveen Floating go up and down completely randomly.

Pair Corralation between Sprott Physical and Nuveen Floating

Given the investment horizon of 90 days Sprott Physical is expected to generate 10.73 times less return on investment than Nuveen Floating. In addition to that, Sprott Physical is 1.23 times more volatile than Nuveen Floating Rate. It trades about 0.0 of its total potential returns per unit of risk. Nuveen Floating Rate is currently generating about 0.06 per unit of volatility. If you would invest  893.00  in Nuveen Floating Rate on September 27, 2024 and sell it today you would earn a total of  7.00  from holding Nuveen Floating Rate or generate 0.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Sprott Physical Gold  vs.  Nuveen Floating Rate

Sprott Physical Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sprott Physical Gold has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Sprott Physical is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Nuveen Floating Rate

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Floating Rate are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. Even with relatively conflicting technical and fundamental indicators, Nuveen Floating may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Sprott Physical and Nuveen Floating

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

The idea behind Sprott Physical Gold and Nuveen Floating Rate 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.