Correlation Between MicroSectorsTM Oil and Nuveen ESG
Can any of the company-specific risk be diversified away by investing in both MicroSectorsTM Oil 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 MicroSectorsTM Oil and Nuveen ESG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MicroSectorsTM Oil Gas and Nuveen ESG Aggregate, you can compare the effects of market volatilities on MicroSectorsTM Oil 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 MicroSectorsTM Oil with a short position of Nuveen ESG. Check out your portfolio center. Please also check ongoing floating volatility patterns of MicroSectorsTM Oil and Nuveen ESG.
Diversification Opportunities for MicroSectorsTM Oil and Nuveen ESG
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MicroSectorsTM and Nuveen is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding MicroSectorsTM Oil Gas and Nuveen ESG Aggregate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen ESG Aggregate and MicroSectorsTM Oil 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 MicroSectorsTM Oil Gas 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 Aggregate has no effect on the direction of MicroSectorsTM Oil i.e., MicroSectorsTM Oil and Nuveen ESG go up and down completely randomly.
Pair Corralation between MicroSectorsTM Oil and Nuveen ESG
Given the investment horizon of 90 days MicroSectorsTM Oil Gas is expected to generate 5.9 times more return on investment than Nuveen ESG. However, MicroSectorsTM Oil is 5.9 times more volatile than Nuveen ESG Aggregate. It trades about 0.32 of its potential returns per unit of risk. Nuveen ESG Aggregate is currently generating about -0.06 per unit of risk. If you would invest 3,623 in MicroSectorsTM Oil Gas on January 25, 2024 and sell it today you would earn a total of 1,221 from holding MicroSectorsTM Oil Gas or generate 33.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.67% |
| Values | Daily Returns |
MicroSectorsTM Oil Gas vs. Nuveen ESG Aggregate
Performance |
| Timeline |
| MicroSectorsTM Oil Gas |
| Nuveen ESG Aggregate |
MicroSectorsTM Oil and Nuveen ESG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MicroSectorsTM Oil and Nuveen ESG
The main advantage of trading using opposite MicroSectorsTM Oil and Nuveen ESG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MicroSectorsTM Oil 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.| MicroSectorsTM Oil vs. MicroSectorsTM Oil Gas | MicroSectorsTM Oil vs. UBS ETRACS | MicroSectorsTM Oil vs. MicroSectors Big Oil | MicroSectorsTM Oil vs. Drum Income Plus |
| Nuveen ESG vs. NuShares Enhanced Yield | Nuveen ESG vs. NuShares ETF Trust | Nuveen ESG vs. Nuveen ESG Small Cap | Nuveen ESG vs. Nuveen ESG Large Cap |
Check out your portfolio center.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 Stocks Directory module to find actively traded stocks across global markets.
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