Correlation Between First American and Nuveen All-american
Can any of the company-specific risk be diversified away by investing in both First American 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 First American 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 First American Investment and Nuveen All American Municipal, you can compare the effects of market volatilities on First American 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 First American with a short position of Nuveen All-american. Check out your portfolio center. Please also check ongoing floating volatility patterns of First American and Nuveen All-american.
Diversification Opportunities for First American and Nuveen All-american
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and Nuveen is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding First American Investment 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 First American 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 First American Investment 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 First American i.e., First American and Nuveen All-american go up and down completely randomly.
Pair Corralation between First American and Nuveen All-american
Assuming the 90 days horizon First American Investment is expected to generate 5.5 times more return on investment than Nuveen All-american. However, First American is 5.5 times more volatile than Nuveen All American Municipal. It trades about 0.22 of its potential returns per unit of risk. Nuveen All American Municipal is currently generating about 0.14 per unit of risk. If you would invest 3,216 in First American Investment on August 24, 2024 and sell it today you would earn a total of 295.00 from holding First American Investment or generate 9.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
First American Investment vs. Nuveen All American Municipal
Performance |
| Timeline |
| First American Investment |
| Nuveen All American |
First American and Nuveen All-american Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First American and Nuveen All-american
The main advantage of trading using opposite First American and Nuveen All-american positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First American 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.| First American vs. Nuveen Mid Cap | First American vs. Nuveen Mid Cap | First American vs. Nuveen Small Cap | First American vs. Nuveen Small Cap |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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