Correlation Between Qudian and Nuveen Dynamic

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

By analyzing existing cross correlation between Qudian Inc and Nuveen Dynamic Municipal, you can compare the effects of market volatilities on Qudian and Nuveen Dynamic 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 Qudian with a short position of Nuveen Dynamic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qudian and Nuveen Dynamic.

Diversification Opportunities for Qudian and Nuveen Dynamic

0.23

Correlation Coefficient

Qudian  Nuveen Dynamic

Modest diversification

The 3 months correlation between Qudian and Nuveen is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Qudian Inc and Nuveen Dynamic Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Dynamic Municipal and Qudian 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 Qudian Inc are associated (or correlated) with Nuveen Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Dynamic Municipal has no effect on the direction of Qudian i.e., Qudian and Nuveen Dynamic go up and down completely randomly.

Pair Corralation between Qudian and Nuveen Dynamic

Allowing for the 90-day total investment horizon Qudian Inc is expected to under-perform the Nuveen Dynamic. In addition to that, Qudian is 7.4 times more volatile than Nuveen Dynamic Municipal. It trades about -0.02 of its total potential returns per unit of risk. Nuveen Dynamic Municipal is currently generating about 0.16 per unit of volatility. If you would invest  976.00  in Nuveen Dynamic Municipal on December 28, 2024 and sell it today you would earn a total of  41.00  from holding Nuveen Dynamic Municipal or generate 4.2% return on investment over 90 days.

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

Qudian Inc  vs.  Nuveen Dynamic Municipal

Qudian Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Qudian Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Qudian is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Nuveen Dynamic Municipal

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Dynamic Municipal are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, Nuveen Dynamic is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Qudian and Nuveen Dynamic

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

The idea behind Qudian Inc and Nuveen Dynamic Municipal 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.

Check out your portfolio center.

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.