Correlation Between Nuveen Symphony and Caterpillar

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

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

Diversification Opportunities for Nuveen Symphony and Caterpillar

0.9

Correlation Coefficient

Nuveen Symphony  Caterpillar

Almost no diversification

The 3 months correlation between Nuveen and Caterpillar is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Symphony Credit and Caterpillar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caterpillar and Nuveen Symphony 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 Nuveen Symphony Credit are associated (or correlated) with Caterpillar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caterpillar has no effect on the direction of Nuveen Symphony i.e., Nuveen Symphony and Caterpillar go up and down completely randomly.

Pair Corralation between Nuveen Symphony and Caterpillar

Assuming the 90 days horizon Nuveen Symphony Credit is expected to under-perform the Caterpillar. But the mutual fund apears to be less risky and, when comparing its historical volatility, Nuveen Symphony Credit is 4.87 times less risky than Caterpillar. The mutual fund trades about -0.08 of its potential returns per unit of risk. The Caterpillar is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  35,466  in Caterpillar on January 24, 2024 and sell it today you would earn a total of  859.00  from holding Caterpillar or generate 2.42% return on investment over 90 days.

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

Nuveen Symphony Credit  vs.  Caterpillar

Nuveen Symphony Credit

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Symphony Credit are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Nuveen Symphony is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Caterpillar

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Caterpillar are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Caterpillar unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nuveen Symphony and Caterpillar

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

The idea behind Nuveen Symphony Credit and Caterpillar 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.