Correlation Between Tri Continental and Nuveen Core

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

By analyzing existing cross correlation between Tri Continental Closed and Nuveen Core Equity, you can compare the effects of market volatilities on Tri Continental and Nuveen Core 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 Tri Continental with a short position of Nuveen Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tri Continental and Nuveen Core.

Diversification Opportunities for Tri Continental and Nuveen Core

0.92

Correlation Coefficient

Tri Continental  Nuveen Core

Almost no diversification

The 3 months correlation between Tri and Nuveen is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Tri Continental Closed and Nuveen Core Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Core Equity and Tri Continental 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 Tri Continental Closed are associated (or correlated) with Nuveen Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Core Equity has no effect on the direction of Tri Continental i.e., Tri Continental and Nuveen Core go up and down completely randomly.

Pair Corralation between Tri Continental and Nuveen Core

Allowing for the 90-day total investment horizon Tri Continental Closed is expected to generate 0.74 times more return on investment than Nuveen Core. However, Tri Continental Closed is 1.36 times less risky than Nuveen Core. It trades about 0.24 of its potential returns per unit of risk. Nuveen Core Equity is currently generating about 0.12 per unit of risk. If you would invest  3,168  in Tri Continental Closed on September 5, 2024 and sell it today you would earn a total of  282.00  from holding Tri Continental Closed or generate 8.9% return on investment over 90 days.

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

Tri Continental Closed  vs.  Nuveen Core Equity

Tri Continental Closed

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tri Continental Closed are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Tri Continental may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Nuveen Core Equity

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Core Equity are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather sound fundamental indicators, Nuveen Core is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Tri Continental and Nuveen Core

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

The idea behind Tri Continental Closed and Nuveen Core Equity 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.