Correlation Between Virtus ETF and Nuveen ESG

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

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

Diversification Opportunities for Virtus ETF and Nuveen ESG

0.73

Correlation Coefficient

Virtus ETF  Nuveen ESG

Poor diversification

The 3 months correlation between Virtus and Nuveen is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Virtus ETF Trust and Nuveen ESG High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen ESG High and Virtus ETF 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 Virtus ETF Trust are associated (or correlated) with Nuveen ESG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen ESG High has no effect on the direction of Virtus ETF i.e., Virtus ETF and Nuveen ESG go up and down completely randomly.

Pair Corralation between Virtus ETF and Nuveen ESG

Given the investment horizon of 90 days Virtus ETF Trust is expected to generate 1.47 times more return on investment than Nuveen ESG. However, Virtus ETF is 1.47 times more volatile than Nuveen ESG High. It trades about 0.19 of its potential returns per unit of risk. Nuveen ESG High is currently generating about 0.1 per unit of risk. If you would invest  2,668  in Virtus ETF Trust on September 4, 2024 and sell it today you would earn a total of  101.00  from holding Virtus ETF Trust or generate 3.79% return on investment over 90 days.

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

Virtus ETF Trust  vs.  Nuveen ESG High

Virtus ETF Trust

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus ETF Trust are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong primary indicators, Virtus ETF is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Nuveen ESG High

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen ESG High are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical indicators, Nuveen ESG is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Virtus ETF and Nuveen ESG

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

The idea behind Virtus ETF Trust and Nuveen ESG 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.