Correlation Between Municipal Total and Nuveen All-american
Can any of the company-specific risk be diversified away by investing in both Municipal Total and Nuveen All-american 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 Municipal Total and Nuveen All-american into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Municipal Total Return and Nuveen All American Municipal, you can compare the effects of market volatilities on Municipal Total and Nuveen All-american 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 Municipal Total with a short position of Nuveen All-american. Check out your portfolio center. Please also check ongoing floating volatility patterns of Municipal Total and Nuveen All-american.
Diversification Opportunities for Municipal Total and Nuveen All-american
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Municipal and NUVEEN is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Municipal Total Return and Nuveen All American Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen All American and Municipal Total 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 Municipal Total Return are associated (or correlated) with Nuveen All-american. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen All American has no effect on the direction of Municipal Total i.e., Municipal Total and Nuveen All-american go up and down completely randomly.
Pair Corralation between Municipal Total and Nuveen All-american
Assuming the 90 days horizon Municipal Total Return is expected to generate 0.84 times more return on investment than Nuveen All-american. However, Municipal Total Return is 1.19 times less risky than Nuveen All-american. It trades about 0.19 of its potential returns per unit of risk. Nuveen All American Municipal is currently generating about 0.14 per unit of risk. If you would invest 1,013 in Municipal Total Return on August 28, 2024 and sell it today you would earn a total of 11.00 from holding Municipal Total Return or generate 1.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Municipal Total Return vs. Nuveen All American Municipal
Performance |
| Timeline |
| Municipal Total Return |
| Nuveen All American |
Municipal Total and Nuveen All-american Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Municipal Total and Nuveen All-american
The main advantage of trading using opposite Municipal Total and Nuveen All-american positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Municipal Total position performs unexpectedly, Nuveen All-american 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 All-american will offset losses from the drop in Nuveen All-american's long position.| Municipal Total vs. Nuveen Small Cap | Municipal Total vs. Nuveen Real Estate | Municipal Total vs. Nuveen Real Estate | Municipal Total vs. Nuveen Preferred Securities |
| Nuveen All-american vs. Nuveen Small Cap | Nuveen All-american vs. Nuveen Real Estate | Nuveen All-american vs. Nuveen Real Estate | Nuveen All-american vs. Nuveen Preferred Securities |
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 Correlations module to find global opportunities by holding instruments from different markets.
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