Correlation Between Nuveen Michigan and Maryland Tax-free
Can any of the company-specific risk be diversified away by investing in both Nuveen Michigan and Maryland Tax-free 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 Michigan and Maryland Tax-free into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nuveen Michigan Municipal and Maryland Tax Free Bond, you can compare the effects of market volatilities on Nuveen Michigan and Maryland Tax-free 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 Michigan with a short position of Maryland Tax-free. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen Michigan and Maryland Tax-free.
Diversification Opportunities for Nuveen Michigan and Maryland Tax-free
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Nuveen and Maryland is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Michigan Municipal and Maryland Tax Free Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maryland Tax Free and Nuveen Michigan 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 Michigan Municipal are associated (or correlated) with Maryland Tax-free. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maryland Tax Free has no effect on the direction of Nuveen Michigan i.e., Nuveen Michigan and Maryland Tax-free go up and down completely randomly.
Pair Corralation between Nuveen Michigan and Maryland Tax-free
Assuming the 90 days horizon Nuveen Michigan Municipal is expected to generate 0.99 times more return on investment than Maryland Tax-free. However, Nuveen Michigan Municipal is 1.01 times less risky than Maryland Tax-free. It trades about 0.21 of its potential returns per unit of risk. Maryland Tax Free Bond is currently generating about 0.18 per unit of risk. If you would invest 1,058 in Nuveen Michigan Municipal on September 4, 2024 and sell it today you would earn a total of 15.00 from holding Nuveen Michigan Municipal or generate 1.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.24% |
| Values | Daily Returns |
Nuveen Michigan Municipal vs. Maryland Tax Free Bond
Performance |
| Timeline |
| Nuveen Michigan Municipal |
| Maryland Tax Free |
Nuveen Michigan and Maryland Tax-free Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nuveen Michigan and Maryland Tax-free
The main advantage of trading using opposite Nuveen Michigan and Maryland Tax-free positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nuveen Michigan position performs unexpectedly, Maryland Tax-free 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 Maryland Tax-free will offset losses from the drop in Maryland Tax-free's long position.| Nuveen Michigan vs. Nuveen Small Cap | Nuveen Michigan vs. Nuveen Real Estate | Nuveen Michigan vs. Nuveen Real Estate | Nuveen Michigan vs. Nuveen Preferred Securities |
| Maryland Tax-free vs. T Rowe Price | Maryland Tax-free vs. T Rowe Price | Maryland Tax-free vs. T Rowe Price | Maryland Tax-free vs. T Rowe Price |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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