Correlation Between Nuveen High and Nuveen Municipal
Can any of the company-specific risk be diversified away by investing in both Nuveen High 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 Nuveen High and Nuveen Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nuveen High Yield and Nuveen Municipal Credit, you can compare the effects of market volatilities on Nuveen High 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 Nuveen High with a short position of Nuveen Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen High and Nuveen Municipal.
Diversification Opportunities for Nuveen High and Nuveen Municipal
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nuveen and Nuveen is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen High Yield 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 Nuveen High 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 High Yield 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 Nuveen High i.e., Nuveen High and Nuveen Municipal go up and down completely randomly.
Pair Corralation between Nuveen High and Nuveen Municipal
Assuming the 90 days horizon Nuveen High is expected to generate 1.28 times less return on investment than Nuveen Municipal. But when comparing it to its historical volatility, Nuveen High Yield is 2.2 times less risky than Nuveen Municipal. It trades about 0.05 of its potential returns per unit of risk. Nuveen Municipal Credit is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,036 in Nuveen Municipal Credit on August 31, 2024 and sell it today you would earn a total of 96.00 from holding Nuveen Municipal Credit or generate 9.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
Nuveen High Yield vs. Nuveen Municipal Credit
Performance |
| Timeline |
| Nuveen High Yield |
| Nuveen Municipal Credit |
Nuveen High and Nuveen Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nuveen High and Nuveen Municipal
The main advantage of trading using opposite Nuveen High and Nuveen Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nuveen High 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.| Nuveen High vs. Oppenheimer Roc High | Nuveen High vs. Nuveen All American Municipal | Nuveen High vs. Nuveen Short Duration High | Nuveen High vs. Nuveen High Yield |
| Nuveen Municipal vs. Munivest Fund | Nuveen Municipal vs. Blackrock Muniholdings Quality | Nuveen Municipal vs. DWS Municipal Income | Nuveen Municipal vs. Blackrock Muniholdings Closed |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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