Correlation Between Nuveen Arizona and Franklin Pennsylvania
Can any of the company-specific risk be diversified away by investing in both Nuveen Arizona and Franklin Pennsylvania 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 Franklin Pennsylvania 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 Franklin Pennsylvania Tax Free, you can compare the effects of market volatilities on Nuveen Arizona and Franklin Pennsylvania 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 Franklin Pennsylvania. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen Arizona and Franklin Pennsylvania.
Diversification Opportunities for Nuveen Arizona and Franklin Pennsylvania
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Nuveen and Franklin is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Arizona Municipal and Franklin Pennsylvania Tax Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Pennsylvania 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 Franklin Pennsylvania. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Pennsylvania has no effect on the direction of Nuveen Arizona i.e., Nuveen Arizona and Franklin Pennsylvania go up and down completely randomly.
Pair Corralation between Nuveen Arizona and Franklin Pennsylvania
Assuming the 90 days horizon Nuveen Arizona Municipal is expected to generate 0.86 times more return on investment than Franklin Pennsylvania. However, Nuveen Arizona Municipal is 1.17 times less risky than Franklin Pennsylvania. It trades about 0.01 of its potential returns per unit of risk. Franklin Pennsylvania Tax Free is currently generating about -0.02 per unit of risk. If you would invest 1,026 in Nuveen Arizona Municipal on September 3, 2024 and sell it today you would earn a total of 1.00 from holding Nuveen Arizona Municipal or generate 0.1% 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. Franklin Pennsylvania Tax Free
Performance |
| Timeline |
| Nuveen Arizona Municipal |
| Franklin Pennsylvania |
Nuveen Arizona and Franklin Pennsylvania Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nuveen Arizona and Franklin Pennsylvania
The main advantage of trading using opposite Nuveen Arizona and Franklin Pennsylvania positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nuveen Arizona position performs unexpectedly, Franklin Pennsylvania 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 Franklin Pennsylvania will offset losses from the drop in Franklin Pennsylvania's long position.| Nuveen Arizona vs. Wt Mutual Fund | Nuveen Arizona vs. Franklin Government Money | Nuveen Arizona vs. John Hancock Money | Nuveen Arizona vs. Prudential Government Money |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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