Correlation Between Nuveen Municipal and Tekla Life
Can any of the company-specific risk be diversified away by investing in both Nuveen Municipal and Tekla Life 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 Municipal and Tekla Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nuveen Municipal Credit and Tekla Life Sciences, you can compare the effects of market volatilities on Nuveen Municipal and Tekla Life 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 Municipal with a short position of Tekla Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen Municipal and Tekla Life.
Diversification Opportunities for Nuveen Municipal and Tekla Life
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nuveen and Tekla is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Municipal Credit and Tekla Life Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tekla Life Sciences and Nuveen Municipal 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 Municipal Credit are associated (or correlated) with Tekla Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tekla Life Sciences has no effect on the direction of Nuveen Municipal i.e., Nuveen Municipal and Tekla Life go up and down completely randomly.
Pair Corralation between Nuveen Municipal and Tekla Life
Given the investment horizon of 90 days Nuveen Municipal is expected to generate 2.16 times less return on investment than Tekla Life. But when comparing it to its historical volatility, Nuveen Municipal Credit is 1.96 times less risky than Tekla Life. It trades about 0.37 of its potential returns per unit of risk. Tekla Life Sciences is currently generating about 0.41 of returns per unit of risk over similar time horizon. If you would invest 1,312 in Tekla Life Sciences on November 1, 2024 and sell it today you would earn a total of 101.00 from holding Tekla Life Sciences or generate 7.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nuveen Municipal Credit vs. Tekla Life Sciences
Performance |
| Timeline |
| Nuveen Municipal Credit |
| Tekla Life Sciences |
Nuveen Municipal and Tekla Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nuveen Municipal and Tekla Life
The main advantage of trading using opposite Nuveen Municipal and Tekla Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nuveen Municipal position performs unexpectedly, Tekla Life 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 Tekla Life will offset losses from the drop in Tekla Life's long position.| Nuveen Municipal vs. Munivest Fund | Nuveen Municipal vs. Blackrock Muniholdings Quality | Nuveen Municipal vs. DWS Municipal Income | Nuveen Municipal vs. Blackrock Muniholdings Closed |
| Tekla Life vs. Tekla World Healthcare | Tekla Life vs. Tekla Healthcare Opportunities | Tekla Life vs. Royce Value Closed | Tekla Life vs. John Hancock Financial |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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