Correlation Between Nuveen All-american and Nuveen Massachusetts
Can any of the company-specific risk be diversified away by investing in both Nuveen All-american and Nuveen Massachusetts 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 Nuveen All-american and Nuveen Massachusetts into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nuveen All American Municipal and Nuveen Massachusetts Municipal, you can compare the effects of market volatilities on Nuveen All-american and Nuveen Massachusetts 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 Nuveen All-american with a short position of Nuveen Massachusetts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen All-american and Nuveen Massachusetts.
Diversification Opportunities for Nuveen All-american and Nuveen Massachusetts
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Nuveen and Nuveen is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen All American Municipal and Nuveen Massachusetts Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Massachusetts and Nuveen All-american 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 Nuveen All American Municipal are associated (or correlated) with Nuveen Massachusetts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Massachusetts has no effect on the direction of Nuveen All-american i.e., Nuveen All-american and Nuveen Massachusetts go up and down completely randomly.
Pair Corralation between Nuveen All-american and Nuveen Massachusetts
Assuming the 90 days horizon Nuveen All-american is expected to generate 1.01 times less return on investment than Nuveen Massachusetts. In addition to that, Nuveen All-american is 1.22 times more volatile than Nuveen Massachusetts Municipal. It trades about 0.2 of its total potential returns per unit of risk. Nuveen Massachusetts Municipal is currently generating about 0.25 per unit of volatility. If you would invest 924.00 in Nuveen Massachusetts Municipal on August 30, 2024 and sell it today you would earn a total of 13.00 from holding Nuveen Massachusetts Municipal or generate 1.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nuveen All American Municipal vs. Nuveen Massachusetts Municipal
Performance |
| Timeline |
| Nuveen All American |
| Nuveen Massachusetts |
Nuveen All-american and Nuveen Massachusetts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nuveen All-american and Nuveen Massachusetts
The main advantage of trading using opposite Nuveen All-american and Nuveen Massachusetts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nuveen All-american position performs unexpectedly, Nuveen Massachusetts 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 Massachusetts will offset losses from the drop in Nuveen Massachusetts' long position.The idea behind Nuveen All American Municipal and Nuveen Massachusetts 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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