Correlation Between Small Cap and Nuveen Small

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

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

Diversification Opportunities for Small Cap and Nuveen Small

0.91

Correlation Coefficient

Small Cap  Nuveen Small

Almost no diversification

The 3 months correlation between Small and Nuveen is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Stock and Nuveen Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Small Cap and Small Cap 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 Small Cap Stock are associated (or correlated) with Nuveen Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Small Cap has no effect on the direction of Small Cap i.e., Small Cap and Nuveen Small go up and down completely randomly.

Pair Corralation between Small Cap and Nuveen Small

Assuming the 90 days horizon Small Cap is expected to generate 1.15 times less return on investment than Nuveen Small. In addition to that, Small Cap is 1.15 times more volatile than Nuveen Small Cap. It trades about 0.16 of its total potential returns per unit of risk. Nuveen Small Cap is currently generating about 0.22 per unit of volatility. If you would invest  3,386  in Nuveen Small Cap on May 21, 2025 and sell it today you would earn a total of  442.00  from holding Nuveen Small Cap or generate 13.05% return on investment over 90 days.

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

Small Cap Stock  vs.  Nuveen Small Cap

Small Cap Stock

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Small Cap Stock are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Small Cap may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Nuveen Small Cap

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Small Cap are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Nuveen Small showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Small Cap and Nuveen Small

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

The idea behind Small Cap Stock and Nuveen Small Cap 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..