Correlation Between Nuveen Preferred and Federated Premier

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Can any of the company-specific risk be diversified away by investing in both Nuveen Preferred and Federated Premier 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 Preferred and Federated Premier into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nuveen Preferred And and Federated Premier Municipal, you can compare the effects of market volatilities on Nuveen Preferred and Federated Premier 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 Preferred with a short position of Federated Premier. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen Preferred and Federated Premier.

Diversification Opportunities for Nuveen Preferred and Federated Premier

-0.23
  Correlation Coefficient

Very good diversification

The 3 months correlation between Nuveen and Federated is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Preferred And and Federated Premier Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Premier and Nuveen Preferred 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 Preferred And are associated (or correlated) with Federated Premier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Premier has no effect on the direction of Nuveen Preferred i.e., Nuveen Preferred and Federated Premier go up and down completely randomly.

Pair Corralation between Nuveen Preferred and Federated Premier

Considering the 90-day investment horizon Nuveen Preferred And is expected to under-perform the Federated Premier. In addition to that, Nuveen Preferred is 1.85 times more volatile than Federated Premier Municipal. It trades about -0.02 of its total potential returns per unit of risk. Federated Premier Municipal is currently generating about 0.04 per unit of volatility. If you would invest  984.00  in Federated Premier Municipal on November 1, 2024 and sell it today you would earn a total of  124.00  from holding Federated Premier Municipal or generate 12.6% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy19.41%
ValuesDaily Returns

Nuveen Preferred And  vs.  Federated Premier Municipal

 Performance 
       Timeline  
Nuveen Preferred And 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Nuveen Preferred And has generated negative risk-adjusted returns adding no value to fund investors. In spite of comparatively stable basic indicators, Nuveen Preferred is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.
Federated Premier 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Federated Premier Municipal has generated negative risk-adjusted returns adding no value to fund investors. In spite of very healthy primary indicators, Federated Premier is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Nuveen Preferred and Federated Premier Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Nuveen Preferred and Federated Premier

The main advantage of trading using opposite Nuveen Preferred and Federated Premier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nuveen Preferred position performs unexpectedly, Federated Premier 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 Premier will offset losses from the drop in Federated Premier's long position.
The idea behind Nuveen Preferred And and Federated Premier Municipal pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.

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