Correlation Between Western Asset and Nuveen Municipalome
Can any of the company-specific risk be diversified away by investing in both Western Asset and Nuveen Municipalome 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 Western Asset and Nuveen Municipalome into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Investment and Nuveen Municipalome, you can compare the effects of market volatilities on Western Asset and Nuveen Municipalome 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 Western Asset with a short position of Nuveen Municipalome. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Nuveen Municipalome.
Diversification Opportunities for Western Asset and Nuveen Municipalome
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Western and Nuveen is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Investment and Nuveen Municipalome in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Municipalome and Western Asset 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 Western Asset Investment are associated (or correlated) with Nuveen Municipalome. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Municipalome has no effect on the direction of Western Asset i.e., Western Asset and Nuveen Municipalome go up and down completely randomly.
Pair Corralation between Western Asset and Nuveen Municipalome
Considering the 90-day investment horizon Western Asset is expected to generate 1.33 times less return on investment than Nuveen Municipalome. But when comparing it to its historical volatility, Western Asset Investment is 1.09 times less risky than Nuveen Municipalome. It trades about 0.03 of its potential returns per unit of risk. Nuveen Municipalome is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 832.00 in Nuveen Municipalome on August 28, 2024 and sell it today you would earn a total of 120.00 from holding Nuveen Municipalome or generate 14.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Investment vs. Nuveen Municipalome
Performance |
| Timeline |
| Western Asset Investment |
| Nuveen Municipalome |
Western Asset and Nuveen Municipalome Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Nuveen Municipalome
The main advantage of trading using opposite Western Asset and Nuveen Municipalome positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Nuveen Municipalome 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 Municipalome will offset losses from the drop in Nuveen Municipalome's long position.| Western Asset vs. Pioneer Floating Rate | Western Asset vs. The Gabelli Equity | Western Asset vs. Pioneer Municipal High | Western Asset vs. Nuveen Global High |
| Nuveen Municipalome vs. DTF Tax Free | Nuveen Municipalome vs. MFS High Yield | Nuveen Municipalome vs. MFS High Income | Nuveen Municipalome vs. John Hancock Income |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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