Correlation Between Dow Jones and Nuveen Michigan
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Nuveen Michigan 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 Dow Jones and Nuveen Michigan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Nuveen Michigan Municipal, you can compare the effects of market volatilities on Dow Jones and Nuveen Michigan 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 Dow Jones with a short position of Nuveen Michigan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Nuveen Michigan.
Diversification Opportunities for Dow Jones and Nuveen Michigan
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Dow and Nuveen is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Nuveen Michigan Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Michigan Municipal and Dow Jones 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 Dow Jones Industrial are associated (or correlated) with Nuveen Michigan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Michigan Municipal has no effect on the direction of Dow Jones i.e., Dow Jones and Nuveen Michigan go up and down completely randomly.
Pair Corralation between Dow Jones and Nuveen Michigan
Assuming the 90 days trading horizon Dow Jones Industrial is expected to under-perform the Nuveen Michigan. In addition to that, Dow Jones is 4.92 times more volatile than Nuveen Michigan Municipal. It trades about -0.08 of its total potential returns per unit of risk. Nuveen Michigan Municipal is currently generating about -0.18 per unit of volatility. If you would invest 1,051 in Nuveen Michigan Municipal on December 24, 2024 and sell it today you would lose (9.00) from holding Nuveen Michigan Municipal or give up 0.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Nuveen Michigan Municipal
Performance |
| Timeline |
Dow Jones and Nuveen Michigan Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Nuveen Michigan Municipal
Pair trading matchups for Nuveen Michigan
Pair Trading with Dow Jones and Nuveen Michigan
The main advantage of trading using opposite Dow Jones and Nuveen Michigan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Nuveen Michigan 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 Michigan will offset losses from the drop in Nuveen Michigan's long position.| Dow Jones vs. Tyson Foods | Dow Jones vs. Smithfield Foods, Common | Dow Jones vs. Academy Sports Outdoors | Dow Jones vs. Paranovus Entertainment Technology |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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