Correlation Between Nuveen NASDAQ and BlackRock Science

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

By analyzing existing cross correlation between Nuveen NASDAQ 100 and BlackRock Science and, you can compare the effects of market volatilities on Nuveen NASDAQ and BlackRock Science 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 NASDAQ with a short position of BlackRock Science. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen NASDAQ and BlackRock Science.

Diversification Opportunities for Nuveen NASDAQ and BlackRock Science

0.86

Correlation Coefficient

Nuveen NASDAQ  BlackRock Science

Very poor diversification

The 3 months correlation between Nuveen and BlackRock is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen NASDAQ 100 and BlackRock Science and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock Science and Nuveen NASDAQ 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 NASDAQ 100 are associated (or correlated) with BlackRock Science. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock Science has no effect on the direction of Nuveen NASDAQ i.e., Nuveen NASDAQ and BlackRock Science go up and down completely randomly.

Pair Corralation between Nuveen NASDAQ and BlackRock Science

Given the investment horizon of 90 days Nuveen NASDAQ 100 is expected to generate 0.85 times more return on investment than BlackRock Science. However, Nuveen NASDAQ 100 is 1.18 times less risky than BlackRock Science. It trades about 0.08 of its potential returns per unit of risk. BlackRock Science and is currently generating about 0.03 per unit of risk. If you would invest  2,734  in Nuveen NASDAQ 100 on October 25, 2024 and sell it today you would earn a total of  40.00  from holding Nuveen NASDAQ 100 or generate 1.46% return on investment over 90 days.

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

Nuveen NASDAQ 100  vs.  BlackRock Science and

Nuveen NASDAQ 100

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen NASDAQ 100 are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Nuveen NASDAQ may actually be approaching a critical reversion point that can send shares even higher in February 2025.

BlackRock Science

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock Science and are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, BlackRock Science showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nuveen NASDAQ and BlackRock Science

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

The idea behind Nuveen NASDAQ 100 and BlackRock Science and 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.