Correlation Between Nuveen Missouri and Financial Industries

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Can any of the company-specific risk be diversified away by investing in both Nuveen Missouri and Financial Industries 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 Missouri and Financial Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nuveen Missouri Municipal and Financial Industries Fund, you can compare the effects of market volatilities on Nuveen Missouri and Financial Industries 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 Missouri with a short position of Financial Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen Missouri and Financial Industries.

Diversification Opportunities for Nuveen Missouri and Financial Industries

NuveenFinancialDiversified AwayNuveenFinancialDiversified Away100%
0.72
  Correlation Coefficient

Poor diversification

The 3 months correlation between Nuveen and Financial is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Missouri Municipal and Financial Industries Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Financial Industries and Nuveen Missouri 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 Missouri Municipal are associated (or correlated) with Financial Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Financial Industries has no effect on the direction of Nuveen Missouri i.e., Nuveen Missouri and Financial Industries go up and down completely randomly.

Pair Corralation between Nuveen Missouri and Financial Industries

Assuming the 90 days horizon Nuveen Missouri Municipal is expected to generate 0.32 times more return on investment than Financial Industries. However, Nuveen Missouri Municipal is 3.1 times less risky than Financial Industries. It trades about 0.12 of its potential returns per unit of risk. Financial Industries Fund is currently generating about 0.01 per unit of risk. If you would invest  1,040  in Nuveen Missouri Municipal on November 23, 2024 and sell it today you would earn a total of  6.00  from holding Nuveen Missouri Municipal or generate 0.58% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Nuveen Missouri Municipal  vs.  Financial Industries Fund

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -10-50
JavaScript chart by amCharts 3.21.15FMMRX FIDAX
       Timeline  
Nuveen Missouri Municipal 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Nuveen Missouri Municipal has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Nuveen Missouri is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb10.3510.410.4510.510.55
Financial Industries 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Financial Industries Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb1818.51919.52020.521

Nuveen Missouri and Financial Industries Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-0.7-0.47-0.24-0.0748-0.0031820.06050.20.430.660.89 1234567
JavaScript chart by amCharts 3.21.15FMMRX FIDAX
       Returns  

Pair Trading with Nuveen Missouri and Financial Industries

The main advantage of trading using opposite Nuveen Missouri and Financial Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nuveen Missouri position performs unexpectedly, Financial Industries 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 Financial Industries will offset losses from the drop in Financial Industries' long position.
The idea behind Nuveen Missouri Municipal and Financial Industries Fund 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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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.

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