Correlation Between Microsoft and Nuveen Municipal
Can any of the company-specific risk be diversified away by investing in both Microsoft 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 Microsoft and Nuveen Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Nuveen Municipal Credit, you can compare the effects of market volatilities on Microsoft 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 Microsoft with a short position of Nuveen Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Nuveen Municipal.
Diversification Opportunities for Microsoft and Nuveen Municipal
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microsoft and Nuveen is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Nuveen Municipal Credit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Municipal Credit and Microsoft 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 Microsoft 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 Credit has no effect on the direction of Microsoft i.e., Microsoft and Nuveen Municipal go up and down completely randomly.
Pair Corralation between Microsoft and Nuveen Municipal
Given the investment horizon of 90 days Microsoft is expected to generate 1.92 times more return on investment than Nuveen Municipal. However, Microsoft is 1.92 times more volatile than Nuveen Municipal Credit. It trades about 0.15 of its potential returns per unit of risk. Nuveen Municipal Credit is currently generating about 0.21 per unit of risk. If you would invest 40,955 in Microsoft on September 2, 2024 and sell it today you would earn a total of 1,391 from holding Microsoft or generate 3.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Nuveen Municipal Credit
Performance |
| Timeline |
| Microsoft |
| Nuveen Municipal Credit |
Microsoft and Nuveen Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Nuveen Municipal
The main advantage of trading using opposite Microsoft and Nuveen Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft 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.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Nuveen Municipal vs. Vanguard Total Stock | Nuveen Municipal vs. Vanguard 500 Index | Nuveen Municipal vs. Vanguard Total Stock | Nuveen Municipal vs. Vanguard Total Stock |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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