Correlation Between American Express and Nuveen Municipal
Can any of the company-specific risk be diversified away by investing in both American Express 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 American Express and Nuveen Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Nuveen Municipal Credit, you can compare the effects of market volatilities on American Express 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 American Express with a short position of Nuveen Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Nuveen Municipal.
Diversification Opportunities for American Express and Nuveen Municipal
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and Nuveen is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Nuveen Municipal Credit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Municipal Credit and American Express 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 Express 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 Credit has no effect on the direction of American Express i.e., American Express and Nuveen Municipal go up and down completely randomly.
Pair Corralation between American Express and Nuveen Municipal
Considering the 90-day investment horizon American Express is expected to generate 2.17 times more return on investment than Nuveen Municipal. However, American Express is 2.17 times more volatile than Nuveen Municipal Credit. It trades about 0.17 of its potential returns per unit of risk. Nuveen Municipal Credit is currently generating about 0.1 per unit of risk. If you would invest 16,370 in American Express on August 24, 2024 and sell it today you would earn a total of 13,455 from holding American Express or generate 82.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Express vs. Nuveen Municipal Credit
Performance |
| Timeline |
| American Express |
| Nuveen Municipal Credit |
American Express and Nuveen Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Nuveen Municipal
The main advantage of trading using opposite American Express and Nuveen Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express 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.| American Express vs. Visa Class A | American Express vs. Mastercard | American Express vs. SoFi Technologies | American Express vs. Coca Cola Consolidated |
| Nuveen Municipal vs. Munivest Fund | Nuveen Municipal vs. Blackrock Muniholdings Quality | Nuveen Municipal vs. DWS Municipal Income | Nuveen Municipal vs. Blackrock Muniholdings Closed |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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