Correlation Between 3i Group and Nuveen Global

Can any of the company-specific risk be diversified away by investing in both 3i Group and Nuveen Global 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 3i Group and Nuveen Global into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 3i Group PLC and Nuveen Global High, you can compare the effects of market volatilities on 3i Group and Nuveen Global 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 3i Group with a short position of Nuveen Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3i Group and Nuveen Global.

Diversification Opportunities for 3i Group and Nuveen Global

0.72

Correlation Coefficient

3i Group  Nuveen Global

Poor diversification

The 3 months correlation between TGOPY and Nuveen is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding 3i Group PLC and Nuveen Global High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Global High and 3i Group 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 3i Group PLC are associated (or correlated) with Nuveen Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Global High has no effect on the direction of 3i Group i.e., 3i Group and Nuveen Global go up and down completely randomly.

Pair Corralation between 3i Group and Nuveen Global

Assuming the 90 days horizon 3i Group PLC is expected to generate 3.25 times more return on investment than Nuveen Global. However, 3i Group is 3.25 times more volatile than Nuveen Global High. It trades about 0.12 of its potential returns per unit of risk. Nuveen Global High is currently generating about 0.14 per unit of risk. If you would invest  2,087  in 3i Group PLC on September 13, 2024 and sell it today you would earn a total of  263.00  from holding 3i Group PLC or generate 12.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

3i Group PLC  vs.  Nuveen Global High

3i Group PLC

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in 3i Group PLC are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, 3i Group showed solid returns over the last few months and may actually be approaching a breakup point.

Nuveen Global High

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Global High are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical and fundamental indicators, Nuveen Global is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with 3i Group and Nuveen Global

The main advantage of trading using opposite 3i Group and Nuveen Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3i Group position performs unexpectedly, Nuveen Global 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 Global will offset losses from the drop in Nuveen Global's long position.

The idea behind 3i Group PLC and Nuveen Global High 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.