Correlation Between Vanguard FTSE and Nuveen Santa

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

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

Diversification Opportunities for Vanguard FTSE and Nuveen Santa

0.87

Correlation Coefficient

Vanguard FTSE  Nuveen Santa

Very poor diversification

The 3 months correlation between Vanguard and Nuveen is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard FTSE Emerging and Nuveen Santa Barbara in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Santa Barbara and Vanguard FTSE 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 FTSE Emerging are associated (or correlated) with Nuveen Santa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Santa Barbara has no effect on the direction of Vanguard FTSE i.e., Vanguard FTSE and Nuveen Santa go up and down completely randomly.

Pair Corralation between Vanguard FTSE and Nuveen Santa

Considering the 90-day investment horizon Vanguard FTSE is expected to generate 2.43 times less return on investment than Nuveen Santa. In addition to that, Vanguard FTSE is 1.12 times more volatile than Nuveen Santa Barbara. It trades about 0.01 of its total potential returns per unit of risk. Nuveen Santa Barbara is currently generating about 0.03 per unit of volatility. If you would invest  2,860  in Nuveen Santa Barbara on January 17, 2024 and sell it today you would earn a total of  422.00  from holding Nuveen Santa Barbara or generate 14.76% return on investment over 90 days.

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

Vanguard FTSE Emerging  vs.  Nuveen Santa Barbara

Vanguard FTSE Emerging

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard FTSE Emerging are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Vanguard FTSE is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Nuveen Santa Barbara

Risk-Adjusted Performance

7 of 100

OK

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

Pair Trading with Vanguard FTSE and Nuveen Santa

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

The idea behind Vanguard FTSE Emerging and Nuveen Santa Barbara 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.