Correlation Between Nuveen Arizona and California High-yield
Can any of the company-specific risk be diversified away by investing in both Nuveen Arizona and California High-yield 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 Arizona and California High-yield into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nuveen Arizona Municipal and California High Yield Municipal, you can compare the effects of market volatilities on Nuveen Arizona and California High-yield 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 Arizona with a short position of California High-yield. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen Arizona and California High-yield.
Diversification Opportunities for Nuveen Arizona and California High-yield
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between NUVEEN and California is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Arizona Municipal and California High Yield Municipa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on California High Yield and Nuveen Arizona 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 Arizona Municipal are associated (or correlated) with California High-yield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of California High Yield has no effect on the direction of Nuveen Arizona i.e., Nuveen Arizona and California High-yield go up and down completely randomly.
Pair Corralation between Nuveen Arizona and California High-yield
Assuming the 90 days horizon Nuveen Arizona Municipal is expected to generate 0.87 times more return on investment than California High-yield. However, Nuveen Arizona Municipal is 1.15 times less risky than California High-yield. It trades about 0.09 of its potential returns per unit of risk. California High Yield Municipal is currently generating about 0.07 per unit of risk. If you would invest 1,014 in Nuveen Arizona Municipal on September 2, 2024 and sell it today you would earn a total of 13.00 from holding Nuveen Arizona Municipal or generate 1.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nuveen Arizona Municipal vs. California High Yield Municipa
Performance |
| Timeline |
| Nuveen Arizona Municipal |
| California High Yield |
Nuveen Arizona and California High-yield Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nuveen Arizona and California High-yield
The main advantage of trading using opposite Nuveen Arizona and California High-yield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nuveen Arizona position performs unexpectedly, California High-yield 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 California High-yield will offset losses from the drop in California High-yield's long position.| Nuveen Arizona vs. Strategic Allocation Moderate | Nuveen Arizona vs. Saat Moderate Strategy | Nuveen Arizona vs. Tiaa Cref Lifestyle Moderate | Nuveen Arizona vs. Qs Moderate Growth |
| California High-yield vs. Equity Growth Fund | California High-yield vs. Income Growth Fund | California High-yield vs. Diversified Bond Fund | California High-yield vs. Emerging Markets Fund |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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