Correlation Between Thompson Largecap and Nuveen New

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

By analyzing existing cross correlation between Thompson Largecap Fund and Nuveen New Jersey, you can compare the effects of market volatilities on Thompson Largecap and Nuveen New 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 Thompson Largecap with a short position of Nuveen New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thompson Largecap and Nuveen New.

Diversification Opportunities for Thompson Largecap and Nuveen New

0.42

Correlation Coefficient

Thompson Largecap  Nuveen New

Very weak diversification

The 3 months correlation between Thompson and Nuveen is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Thompson Largecap Fund and Nuveen New Jersey in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen New Jersey and Thompson Largecap 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 Thompson Largecap Fund are associated (or correlated) with Nuveen New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen New Jersey has no effect on the direction of Thompson Largecap i.e., Thompson Largecap and Nuveen New go up and down completely randomly.

Pair Corralation between Thompson Largecap and Nuveen New

Assuming the 90 days horizon Thompson Largecap Fund is expected to generate 2.3 times more return on investment than Nuveen New. However, Thompson Largecap is 2.3 times more volatile than Nuveen New Jersey. It trades about -0.04 of its potential returns per unit of risk. Nuveen New Jersey is currently generating about -0.15 per unit of risk. If you would invest  9,972  in Thompson Largecap Fund on December 30, 2024 and sell it today you would lose (239.00) from holding Thompson Largecap Fund or give up 2.4% of portfolio value over 90 days.

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

Thompson Largecap Fund  vs.  Nuveen New Jersey

Thompson Largecap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Thompson Largecap Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Thompson Largecap is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Nuveen New Jersey

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nuveen New Jersey has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward-looking indicators, Nuveen New is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Thompson Largecap and Nuveen New

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

The idea behind Thompson Largecap Fund and Nuveen New Jersey 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.