Correlation Between Aggressive Balanced and Nuveen Dividend

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

By analyzing existing cross correlation between Aggressive Balanced Allocation and Nuveen Dividend Value, you can compare the effects of market volatilities on Aggressive Balanced and Nuveen Dividend 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 Aggressive Balanced with a short position of Nuveen Dividend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aggressive Balanced and Nuveen Dividend.

Diversification Opportunities for Aggressive Balanced and Nuveen Dividend

0.9

Correlation Coefficient

Aggressive Balanced  Nuveen Dividend

Almost no diversification

The 3 months correlation between Aggressive and Nuveen is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Aggressive Balanced Allocation and Nuveen Dividend Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Dividend Value and Aggressive Balanced 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 Aggressive Balanced Allocation are associated (or correlated) with Nuveen Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Dividend Value has no effect on the direction of Aggressive Balanced i.e., Aggressive Balanced and Nuveen Dividend go up and down completely randomly.

Pair Corralation between Aggressive Balanced and Nuveen Dividend

Assuming the 90 days horizon Aggressive Balanced Allocation is expected to generate 1.1 times more return on investment than Nuveen Dividend. However, Aggressive Balanced is 1.1 times more volatile than Nuveen Dividend Value. It trades about 0.05 of its potential returns per unit of risk. Nuveen Dividend Value is currently generating about 0.05 per unit of risk. If you would invest  1,188  in Aggressive Balanced Allocation on September 15, 2024 and sell it today you would earn a total of  26.00  from holding Aggressive Balanced Allocation or generate 2.19% return on investment over 90 days.

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

Aggressive Balanced Allocation  vs.  Nuveen Dividend Value

Aggressive Balanced

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Aggressive Balanced Allocation are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Aggressive Balanced is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Nuveen Dividend Value

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Dividend Value are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Nuveen Dividend is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Aggressive Balanced and Nuveen Dividend

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

The idea behind Aggressive Balanced Allocation and Nuveen Dividend Value 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..