Correlation Between Nuveen Minnesota and Federated Pennsylvania
Can any of the company-specific risk be diversified away by investing in both Nuveen Minnesota and Federated Pennsylvania 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 Federated Pennsylvania 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 Federated Pennsylvania Municipal, you can compare the effects of market volatilities on Nuveen Minnesota and Federated Pennsylvania 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 Federated Pennsylvania. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen Minnesota and Federated Pennsylvania.
Diversification Opportunities for Nuveen Minnesota and Federated Pennsylvania
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Nuveen and Federated is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Minnesota Municipal and Federated Pennsylvania Municip in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Pennsylvania 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 Federated Pennsylvania. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Pennsylvania has no effect on the direction of Nuveen Minnesota i.e., Nuveen Minnesota and Federated Pennsylvania go up and down completely randomly.
Pair Corralation between Nuveen Minnesota and Federated Pennsylvania
Assuming the 90 days horizon Nuveen Minnesota Municipal is expected to generate 1.06 times more return on investment than Federated Pennsylvania. However, Nuveen Minnesota is 1.06 times more volatile than Federated Pennsylvania Municipal. It trades about 0.06 of its potential returns per unit of risk. Federated Pennsylvania Municipal is currently generating about 0.03 per unit of risk. If you would invest 1,040 in Nuveen Minnesota Municipal on October 22, 2024 and sell it today you would earn a total of 28.00 from holding Nuveen Minnesota Municipal or generate 2.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nuveen Minnesota Municipal vs. Federated Pennsylvania Municip
Performance |
| Timeline |
| Nuveen Minnesota Mun |
| Federated Pennsylvania |
Nuveen Minnesota and Federated Pennsylvania Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nuveen Minnesota and Federated Pennsylvania
The main advantage of trading using opposite Nuveen Minnesota and Federated Pennsylvania positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nuveen Minnesota position performs unexpectedly, Federated Pennsylvania 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 Federated Pennsylvania will offset losses from the drop in Federated Pennsylvania's long position.| Nuveen Minnesota vs. Ab High Income | Nuveen Minnesota vs. Federated High Yield | Nuveen Minnesota vs. Multi Manager High Yield | Nuveen Minnesota vs. Virtus High Yield |
| Federated Pennsylvania vs. Dreyfusstandish Global Fixed | Federated Pennsylvania vs. Gmo Global Equity | Federated Pennsylvania vs. Small Cap Equity | Federated Pennsylvania vs. T Rowe Price |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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