Correlation Between Vanguard Information and Nuveen Small

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

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

Diversification Opportunities for Vanguard Information and Nuveen Small

0.88

Correlation Coefficient

Vanguard Information  Nuveen Small

Very poor diversification

The 3 months correlation between Vanguard and Nuveen is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Information Technolog and Nuveen Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Small Cap and Vanguard Information 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 Vanguard Information Technology are associated (or correlated) with Nuveen Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Small Cap has no effect on the direction of Vanguard Information i.e., Vanguard Information and Nuveen Small go up and down completely randomly.

Pair Corralation between Vanguard Information and Nuveen Small

Assuming the 90 days horizon Vanguard Information Technology is expected to generate 1.03 times more return on investment than Nuveen Small. However, Vanguard Information is 1.03 times more volatile than Nuveen Small Cap. It trades about 0.14 of its potential returns per unit of risk. Nuveen Small Cap is currently generating about -0.23 per unit of risk. If you would invest  31,819  in Vanguard Information Technology on September 25, 2024 and sell it today you would earn a total of  1,171  from holding Vanguard Information Technology or generate 3.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.24%
Values	Daily Returns

Vanguard Information Technolog  vs.  Nuveen Small Cap

Vanguard Information

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Information Technology are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Vanguard Information may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Nuveen Small Cap

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Small Cap are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Nuveen Small may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Vanguard Information and Nuveen Small

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

The idea behind Vanguard Information Technology and Nuveen Small 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.

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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.