Correlation Between Vanguard Russell and Nuveen Growth

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

By analyzing existing cross correlation between Vanguard Russell 1000 and Nuveen Growth Opportunities, you can compare the effects of market volatilities on Vanguard Russell and Nuveen Growth 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 Russell with a short position of Nuveen Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Russell and Nuveen Growth.

Diversification Opportunities for Vanguard Russell and Nuveen Growth

0.7

Correlation Coefficient

Vanguard Russell  Nuveen Growth

Poor diversification

The 3 months correlation between Vanguard and Nuveen is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Russell 1000 and Nuveen Growth Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Growth Opport and Vanguard Russell 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 Russell 1000 are associated (or correlated) with Nuveen Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Growth Opport has no effect on the direction of Vanguard Russell i.e., Vanguard Russell and Nuveen Growth go up and down completely randomly.

Pair Corralation between Vanguard Russell and Nuveen Growth

Assuming the 90 days horizon Vanguard Russell 1000 is expected to generate 0.96 times more return on investment than Nuveen Growth. However, Vanguard Russell 1000 is 1.04 times less risky than Nuveen Growth. It trades about 0.13 of its potential returns per unit of risk. Nuveen Growth Opportunities is currently generating about 0.09 per unit of risk. If you would invest  75,340  in Vanguard Russell 1000 on October 24, 2024 and sell it today you would earn a total of  6,941  from holding Vanguard Russell 1000 or generate 9.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.67%
Values	Daily Returns

Vanguard Russell 1000  vs.  Nuveen Growth Opportunities

Vanguard Russell 1000

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Russell 1000 are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Vanguard Russell may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Nuveen Growth Opport

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Growth Opportunities are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile technical and fundamental indicators, Nuveen Growth may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Vanguard Russell and Nuveen Growth

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

The idea behind Vanguard Russell 1000 and Nuveen Growth Opportunities 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.