Correlation Between Western Asset and Nuveen Global

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

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

Diversification Opportunities for Western Asset and Nuveen Global

0.18

Correlation Coefficient

Western Asset  Nuveen Global

Average diversification

The 3 months correlation between Western and Nuveen is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Diversified and Nuveen Global High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Global High and Western Asset 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 Western Asset Diversified are associated (or correlated) with Nuveen Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Global High has no effect on the direction of Western Asset i.e., Western Asset and Nuveen Global go up and down completely randomly.

Pair Corralation between Western Asset and Nuveen Global

Considering the 90-day investment horizon Western Asset is expected to generate 4.67 times less return on investment than Nuveen Global. In addition to that, Western Asset is 1.18 times more volatile than Nuveen Global High. It trades about 0.03 of its total potential returns per unit of risk. Nuveen Global High is currently generating about 0.17 per unit of volatility. If you would invest  1,262  in Nuveen Global High on September 3, 2024 and sell it today you would earn a total of  71.00  from holding Nuveen Global High or generate 5.63% return on investment over 90 days.

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

Western Asset Diversified  vs.  Nuveen Global High

Western Asset Diversified

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Western Asset Diversified are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental indicators, Western Asset is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Nuveen Global High

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Global High are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical and fundamental indicators, Nuveen Global is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Western Asset and Nuveen Global

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

The idea behind Western Asset Diversified and Nuveen Global 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .