Correlation Between Western Asset and Nuveen Municipal
Can any of the company-specific risk be diversified away by investing in both Western Asset and Nuveen Municipal 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 Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Managed and Nuveen Municipal High, you can compare the effects of market volatilities on Western Asset and Nuveen Municipal 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 Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Nuveen Municipal.
Diversification Opportunities for Western Asset and Nuveen Municipal
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Western and Nuveen is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Managed and Nuveen Municipal High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Municipal High 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 Managed are associated (or correlated) with Nuveen Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Municipal High has no effect on the direction of Western Asset i.e., Western Asset and Nuveen Municipal go up and down completely randomly.
Pair Corralation between Western Asset and Nuveen Municipal
Considering the 90-day investment horizon Western Asset is expected to generate 1.33 times less return on investment than Nuveen Municipal. In addition to that, Western Asset is 1.01 times more volatile than Nuveen Municipal High. It trades about 0.26 of its total potential returns per unit of risk. Nuveen Municipal High is currently generating about 0.35 per unit of volatility. If you would invest 1,098 in Nuveen Municipal High on September 2, 2024 and sell it today you would earn a total of 50.00 from holding Nuveen Municipal High or generate 4.55% 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 Managed vs. Nuveen Municipal High
Performance |
| Timeline |
| Western Asset Managed |
| Nuveen Municipal High |
Western Asset and Nuveen Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Nuveen Municipal
The main advantage of trading using opposite Western Asset and Nuveen Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Nuveen Municipal 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 Municipal will offset losses from the drop in Nuveen Municipal's long position.| Western Asset vs. Western Asset Municipal | Western Asset vs. Blackrock Muniholdings Quality | Western Asset vs. DTF Tax Free | Western Asset vs. John Hancock Income |
| Nuveen Municipal vs. Western Asset Managed | Nuveen Municipal vs. Blackrock Muniholdings Quality | Nuveen Municipal vs. DTF Tax Free | Nuveen Municipal 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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