Correlation Between Nuveen Short and Municipal Total
Can any of the company-specific risk be diversified away by investing in both Nuveen Short and Municipal Total 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 Short and Municipal Total into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nuveen Short Term and Municipal Total Return, you can compare the effects of market volatilities on Nuveen Short and Municipal Total 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 Short with a short position of Municipal Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen Short and Municipal Total.
Diversification Opportunities for Nuveen Short and Municipal Total
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Nuveen and Municipal is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Short Term and Municipal Total Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Municipal Total Return and Nuveen Short 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 Short Term are associated (or correlated) with Municipal Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Municipal Total Return has no effect on the direction of Nuveen Short i.e., Nuveen Short and Municipal Total go up and down completely randomly.
Pair Corralation between Nuveen Short and Municipal Total
Assuming the 90 days horizon Nuveen Short is expected to generate 3.57 times less return on investment than Municipal Total. But when comparing it to its historical volatility, Nuveen Short Term is 3.73 times less risky than Municipal Total. It trades about 0.2 of its potential returns per unit of risk. Municipal Total Return is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1,013 in Municipal Total Return on August 28, 2024 and sell it today you would earn a total of 11.00 from holding Municipal Total Return or generate 1.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nuveen Short Term vs. Municipal Total Return
Performance |
| Timeline |
| Nuveen Short Term |
| Municipal Total Return |
Nuveen Short and Municipal Total Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nuveen Short and Municipal Total
The main advantage of trading using opposite Nuveen Short and Municipal Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nuveen Short position performs unexpectedly, Municipal Total 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 Municipal Total will offset losses from the drop in Municipal Total's long position.| Nuveen Short vs. Nuveen Small Cap | Nuveen Short vs. Nuveen Real Estate | Nuveen Short vs. Nuveen Real Estate | Nuveen Short vs. Nuveen Preferred Securities |
| Municipal Total vs. Nuveen Small Cap | Municipal Total vs. Nuveen Real Estate | Municipal Total vs. Nuveen Real Estate | Municipal Total vs. Nuveen Preferred Securities |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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