Correlation Between American High-income and Nuveen High
Can any of the company-specific risk be diversified away by investing in both American High-income and Nuveen High 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 American High-income and Nuveen High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American High Income Municipal and Nuveen High Yield, you can compare the effects of market volatilities on American High-income and Nuveen High 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 American High-income with a short position of Nuveen High. Check out your portfolio center. Please also check ongoing floating volatility patterns of American High-income and Nuveen High.
Diversification Opportunities for American High-income and Nuveen High
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and Nuveen is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding American High Income Municipal and Nuveen High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen High Yield and American High-income 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 American High Income Municipal are associated (or correlated) with Nuveen High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen High Yield has no effect on the direction of American High-income i.e., American High-income and Nuveen High go up and down completely randomly.
Pair Corralation between American High-income and Nuveen High
Assuming the 90 days horizon American High Income Municipal is expected to generate 0.69 times more return on investment than Nuveen High. However, American High Income Municipal is 1.45 times less risky than Nuveen High. It trades about 0.1 of its potential returns per unit of risk. Nuveen High Yield is currently generating about 0.04 per unit of risk. If you would invest 1,362 in American High Income Municipal on September 2, 2024 and sell it today you would earn a total of 195.00 from holding American High Income Municipal or generate 14.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American High Income Municipal vs. Nuveen High Yield
Performance |
| Timeline |
| American High Income |
| Nuveen High Yield |
American High-income and Nuveen High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American High-income and Nuveen High
The main advantage of trading using opposite American High-income and Nuveen High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American High-income position performs unexpectedly, Nuveen High 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 High will offset losses from the drop in Nuveen High's long position.| American High-income vs. Income Fund Of | American High-income vs. New World Fund | American High-income vs. American Mutual Fund | American High-income vs. American Mutual Fund |
| Nuveen High vs. Oppenheimer Roc High | Nuveen High vs. Nuveen All American Municipal | Nuveen High vs. Nuveen High Yield | Nuveen High vs. Invesco High Yield |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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