Correlation Between Nuveen Minnesota and Emerging Markets
Can any of the company-specific risk be diversified away by investing in both Nuveen Minnesota and Emerging Markets 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 Minnesota and Emerging Markets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nuveen Minnesota Municipal and The Emerging Markets, you can compare the effects of market volatilities on Nuveen Minnesota and Emerging Markets 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 Minnesota with a short position of Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen Minnesota and Emerging Markets.
Diversification Opportunities for Nuveen Minnesota and Emerging Markets
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Nuveen and Emerging is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Minnesota Municipal and The Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets and Nuveen Minnesota 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 Minnesota Municipal are associated (or correlated) with Emerging Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Markets has no effect on the direction of Nuveen Minnesota i.e., Nuveen Minnesota and Emerging Markets go up and down completely randomly.
Pair Corralation between Nuveen Minnesota and Emerging Markets
Assuming the 90 days horizon Nuveen Minnesota is expected to generate 1.81 times less return on investment than Emerging Markets. But when comparing it to its historical volatility, Nuveen Minnesota Municipal is 4.89 times less risky than Emerging Markets. It trades about 0.15 of its potential returns per unit of risk. The Emerging Markets is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,832 in The Emerging Markets on September 14, 2024 and sell it today you would earn a total of 262.00 from holding The Emerging Markets or generate 14.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nuveen Minnesota Municipal vs. The Emerging Markets
Performance |
| Timeline |
| Nuveen Minnesota Mun |
| Emerging Markets |
Nuveen Minnesota and Emerging Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nuveen Minnesota and Emerging Markets
The main advantage of trading using opposite Nuveen Minnesota and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nuveen Minnesota position performs unexpectedly, Emerging Markets 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 Emerging Markets will offset losses from the drop in Emerging Markets' long position.| Nuveen Minnesota vs. Tortoise Energy Independence | Nuveen Minnesota vs. Energy Basic Materials | Nuveen Minnesota vs. Gmo Resources | Nuveen Minnesota vs. Jennison Natural Resources |
| Emerging Markets vs. Franklin High Yield | Emerging Markets vs. Baird Strategic Municipal | Emerging Markets vs. Ishares Municipal Bond | Emerging Markets vs. Nuveen Minnesota Municipal |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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