Correlation Between Government Securities and Nuveen Mid

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

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

Diversification Opportunities for Government Securities and Nuveen Mid

-0.63

Correlation Coefficient

Government Securities  Nuveen Mid

Excellent diversification

The 3 months correlation between Government and Nuveen is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Government Securities Fund and Nuveen Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Mid Cap and Government Securities 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 Government Securities Fund are associated (or correlated) with Nuveen Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Mid Cap has no effect on the direction of Government Securities i.e., Government Securities and Nuveen Mid go up and down completely randomly.

Pair Corralation between Government Securities and Nuveen Mid

Assuming the 90 days horizon Government Securities Fund is expected to under-perform the Nuveen Mid. But the mutual fund apears to be less risky and, when comparing its historical volatility, Government Securities Fund is 3.59 times less risky than Nuveen Mid. The mutual fund trades about -0.05 of its potential returns per unit of risk. The Nuveen Mid Cap is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  5,714  in Nuveen Mid Cap on September 3, 2024 and sell it today you would earn a total of  490.00  from holding Nuveen Mid Cap or generate 8.58% return on investment over 90 days.

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

Government Securities Fund  vs.  Nuveen Mid Cap

Government Securities

Risk-Adjusted Performance

0 of 100

Very Weak

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

Nuveen Mid Cap

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Mid Cap are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Nuveen Mid may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Government Securities and Nuveen Mid

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

The idea behind Government Securities Fund and Nuveen Mid Cap 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.