Correlation Between Westwood Holdings and Nuveen Arizona

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

By analyzing existing cross correlation between Westwood Holdings Group and Nuveen Arizona Quality, you can compare the effects of market volatilities on Westwood Holdings and Nuveen Arizona 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 Westwood Holdings with a short position of Nuveen Arizona. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westwood Holdings and Nuveen Arizona.

Diversification Opportunities for Westwood Holdings and Nuveen Arizona

0.68

Correlation Coefficient

Westwood Holdings  Nuveen Arizona

Poor diversification

The 3 months correlation between Westwood and Nuveen is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Westwood Holdings Group and Nuveen Arizona Quality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Arizona Quality and Westwood Holdings 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 Westwood Holdings Group are associated (or correlated) with Nuveen Arizona. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Arizona Quality has no effect on the direction of Westwood Holdings i.e., Westwood Holdings and Nuveen Arizona go up and down completely randomly.

Pair Corralation between Westwood Holdings and Nuveen Arizona

Considering the 90-day investment horizon Westwood Holdings Group is expected to generate 1.61 times more return on investment than Nuveen Arizona. However, Westwood Holdings is 1.61 times more volatile than Nuveen Arizona Quality. It trades about 0.08 of its potential returns per unit of risk. Nuveen Arizona Quality is currently generating about 0.11 per unit of risk. If you would invest  1,415  in Westwood Holdings Group on December 26, 2024 and sell it today you would earn a total of  151.00  from holding Westwood Holdings Group or generate 10.67% return on investment over 90 days.

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

Westwood Holdings Group  vs.  Nuveen Arizona Quality

Westwood Holdings

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Westwood Holdings Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical indicators, Westwood Holdings may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Nuveen Arizona Quality

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Arizona Quality are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Nuveen Arizona may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Westwood Holdings and Nuveen Arizona

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

The idea behind Westwood Holdings Group and Nuveen Arizona Quality 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.