Correlation Between Nuveen All-american and Nuveen New
Can any of the company-specific risk be diversified away by investing in both Nuveen All-american and Nuveen New 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 New 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 New Jersey, you can compare the effects of market volatilities on Nuveen All-american and Nuveen New 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 New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen All-american and Nuveen New.
Diversification Opportunities for Nuveen All-american and Nuveen New
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Nuveen and Nuveen is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen All American Municipal and Nuveen New Jersey in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen New Jersey 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 New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen New Jersey has no effect on the direction of Nuveen All-american i.e., Nuveen All-american and Nuveen New go up and down completely randomly.
Pair Corralation between Nuveen All-american and Nuveen New
Assuming the 90 days horizon Nuveen All-american is expected to generate 1.21 times less return on investment than Nuveen New. But when comparing it to its historical volatility, Nuveen All American Municipal is 1.11 times less risky than Nuveen New. It trades about 0.21 of its potential returns per unit of risk. Nuveen New Jersey is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 1,053 in Nuveen New Jersey on September 2, 2024 and sell it today you would earn a total of 19.00 from holding Nuveen New Jersey or generate 1.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nuveen All American Municipal vs. Nuveen New Jersey
Performance |
| Timeline |
| Nuveen All American |
| Nuveen New Jersey |
Nuveen All-american and Nuveen New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nuveen All-american and Nuveen New
The main advantage of trading using opposite Nuveen All-american and Nuveen New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nuveen All-american position performs unexpectedly, Nuveen New 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 New will offset losses from the drop in Nuveen New's long position.The idea behind Nuveen All American Municipal and Nuveen New Jersey 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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