Correlation Between Consumer Staples and Nuveen All-american
Can any of the company-specific risk be diversified away by investing in both Consumer Staples and Nuveen All-american 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 Consumer Staples and Nuveen All-american into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Consumer Staples Portfolio and Nuveen All American Municipal, you can compare the effects of market volatilities on Consumer Staples and Nuveen All-american 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 Consumer Staples with a short position of Nuveen All-american. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consumer Staples and Nuveen All-american.
Diversification Opportunities for Consumer Staples and Nuveen All-american
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Consumer and NUVEEN is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Consumer Staples Portfolio and Nuveen All American Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen All American and Consumer Staples 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 Consumer Staples Portfolio are associated (or correlated) with Nuveen All-american. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen All American has no effect on the direction of Consumer Staples i.e., Consumer Staples and Nuveen All-american go up and down completely randomly.
Pair Corralation between Consumer Staples and Nuveen All-american
Assuming the 90 days horizon Consumer Staples Portfolio is expected to under-perform the Nuveen All-american. In addition to that, Consumer Staples is 2.28 times more volatile than Nuveen All American Municipal. It trades about -0.14 of its total potential returns per unit of risk. Nuveen All American Municipal is currently generating about 0.14 per unit of volatility. If you would invest 1,009 in Nuveen All American Municipal on August 25, 2024 and sell it today you would earn a total of 10.00 from holding Nuveen All American Municipal or generate 0.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Consumer Staples Portfolio vs. Nuveen All American Municipal
Performance |
| Timeline |
| Consumer Staples Por |
| Nuveen All American |
Consumer Staples and Nuveen All-american Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Consumer Staples and Nuveen All-american
The main advantage of trading using opposite Consumer Staples and Nuveen All-american positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consumer Staples position performs unexpectedly, Nuveen All-american 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 All-american will offset losses from the drop in Nuveen All-american's long position.| Consumer Staples vs. Jpmorgan High Yield | Consumer Staples vs. Artisan High Income | Consumer Staples vs. Ppm High Yield | Consumer Staples vs. Multi Manager High Yield |
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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