Correlation Between Alcoa Corp and Nuveen Municipal
Can any of the company-specific risk be diversified away by investing in both Alcoa Corp and Nuveen Municipal 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 Alcoa Corp and Nuveen Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alcoa Corp and Nuveen Municipal High, you can compare the effects of market volatilities on Alcoa Corp and Nuveen Municipal 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 Alcoa Corp with a short position of Nuveen Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alcoa Corp and Nuveen Municipal.
Diversification Opportunities for Alcoa Corp and Nuveen Municipal
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Alcoa and Nuveen is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Alcoa Corp and Nuveen Municipal High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Municipal High and Alcoa Corp 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 Alcoa Corp are associated (or correlated) with Nuveen Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Municipal High has no effect on the direction of Alcoa Corp i.e., Alcoa Corp and Nuveen Municipal go up and down completely randomly.
Pair Corralation between Alcoa Corp and Nuveen Municipal
Allowing for the 90-day total investment horizon Alcoa Corp is expected to under-perform the Nuveen Municipal. In addition to that, Alcoa Corp is 13.24 times more volatile than Nuveen Municipal High. It trades about -0.07 of its total potential returns per unit of risk. Nuveen Municipal High is currently generating about 0.42 per unit of volatility. If you would invest 1,123 in Nuveen Municipal High on September 12, 2024 and sell it today you would earn a total of 24.00 from holding Nuveen Municipal High or generate 2.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alcoa Corp vs. Nuveen Municipal High
Performance |
| Timeline |
| Alcoa Corp |
| Nuveen Municipal High |
Alcoa Corp and Nuveen Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alcoa Corp and Nuveen Municipal
The main advantage of trading using opposite Alcoa Corp and Nuveen Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alcoa Corp position performs unexpectedly, Nuveen Municipal 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 Municipal will offset losses from the drop in Nuveen Municipal's long position.| Alcoa Corp vs. Sligro Food Group | Alcoa Corp vs. FitLife Brands, Common | Alcoa Corp vs. Aeye Inc | Alcoa Corp vs. Ep Emerging Markets |
| Nuveen Municipal vs. Vanguard Total Stock | Nuveen Municipal vs. Vanguard 500 Index | Nuveen Municipal vs. Vanguard Total Stock | Nuveen Municipal vs. Vanguard Total Stock |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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