Correlation Between Destinations Multi and Nuveen Minnesota
Can any of the company-specific risk be diversified away by investing in both Destinations Multi and Nuveen Minnesota 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 Destinations Multi and Nuveen Minnesota into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Destinations Multi Strategy and Nuveen Minnesota Municipal, you can compare the effects of market volatilities on Destinations Multi and Nuveen Minnesota 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 Destinations Multi with a short position of Nuveen Minnesota. Check out your portfolio center. Please also check ongoing floating volatility patterns of Destinations Multi and Nuveen Minnesota.
Diversification Opportunities for Destinations Multi and Nuveen Minnesota
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Destinations and Nuveen is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Destinations Multi Strategy and Nuveen Minnesota Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Minnesota Mun and Destinations Multi 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 Destinations Multi Strategy are associated (or correlated) with Nuveen Minnesota. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Minnesota Mun has no effect on the direction of Destinations Multi i.e., Destinations Multi and Nuveen Minnesota go up and down completely randomly.
Pair Corralation between Destinations Multi and Nuveen Minnesota
Assuming the 90 days horizon Destinations Multi is expected to generate 4.28 times less return on investment than Nuveen Minnesota. But when comparing it to its historical volatility, Destinations Multi Strategy is 1.08 times less risky than Nuveen Minnesota. It trades about 0.06 of its potential returns per unit of risk. Nuveen Minnesota Municipal is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 1,077 in Nuveen Minnesota Municipal on September 14, 2024 and sell it today you would earn a total of 9.00 from holding Nuveen Minnesota Municipal or generate 0.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Destinations Multi Strategy vs. Nuveen Minnesota Municipal
Performance |
| Timeline |
| Destinations Multi |
| Nuveen Minnesota Mun |
Destinations Multi and Nuveen Minnesota Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Destinations Multi and Nuveen Minnesota
The main advantage of trading using opposite Destinations Multi and Nuveen Minnesota positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Destinations Multi position performs unexpectedly, Nuveen Minnesota 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 Minnesota will offset losses from the drop in Nuveen Minnesota's long position.The idea behind Destinations Multi Strategy and Nuveen Minnesota Municipal 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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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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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