Correlation Between Nuveen California and Federated Premier
Can any of the company-specific risk be diversified away by investing in both Nuveen California 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 California 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 California Amt and Federated Premier Municipal, you can compare the effects of market volatilities on Nuveen California 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 California with a short position of Federated Premier. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen California and Federated Premier.
Diversification Opportunities for Nuveen California and Federated Premier
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Nuveen and Federated is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen California Amt 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 California 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 California Amt 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 California i.e., Nuveen California and Federated Premier go up and down completely randomly.
Pair Corralation between Nuveen California and Federated Premier
Considering the 90-day investment horizon Nuveen California Amt is expected to under-perform the Federated Premier. But the fund apears to be less risky and, when comparing its historical volatility, Nuveen California Amt is 1.48 times less risky than Federated Premier. The fund trades about -0.1 of its potential returns per unit of risk. The Federated Premier Municipal is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,130 in Federated Premier Municipal on September 12, 2024 and sell it today you would earn a total of 17.00 from holding Federated Premier Municipal or generate 1.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nuveen California Amt vs. Federated Premier Municipal
Performance |
| Timeline |
| Nuveen California Amt |
| Federated Premier |
Nuveen California and Federated Premier Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nuveen California and Federated Premier
The main advantage of trading using opposite Nuveen California and Federated Premier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nuveen California 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.| Nuveen California vs. BlackRock California Municipal | Nuveen California vs. Blackrock Muniyield Quality | Nuveen California vs. Blackrock Muni Intermediate | Nuveen California vs. Munivest Fund |
| Federated Premier vs. Oxford Lane Capital | Federated Premier vs. Orchid Island Capital | Federated Premier vs. Guggenheim Strategic Opportunities | Federated Premier vs. Stone Harbor Emerging |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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