Correlation Between Nuveen Strategic and Franklin Federal
Can any of the company-specific risk be diversified away by investing in both Nuveen Strategic and Franklin Federal 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 Strategic and Franklin Federal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nuveen Strategic Municipal and Franklin Federal Limited Term, you can compare the effects of market volatilities on Nuveen Strategic and Franklin Federal 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 Strategic with a short position of Franklin Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen Strategic and Franklin Federal.
Diversification Opportunities for Nuveen Strategic and Franklin Federal
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nuveen and Franklin is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Strategic Municipal and Franklin Federal Limited Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Federal Lim and Nuveen Strategic 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 Strategic Municipal are associated (or correlated) with Franklin Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Federal Lim has no effect on the direction of Nuveen Strategic i.e., Nuveen Strategic and Franklin Federal go up and down completely randomly.
Pair Corralation between Nuveen Strategic and Franklin Federal
Assuming the 90 days horizon Nuveen Strategic Municipal is expected to generate 2.65 times more return on investment than Franklin Federal. However, Nuveen Strategic is 2.65 times more volatile than Franklin Federal Limited Term. It trades about 0.08 of its potential returns per unit of risk. Franklin Federal Limited Term is currently generating about 0.11 per unit of risk. If you would invest 995.00 in Nuveen Strategic Municipal on November 3, 2024 and sell it today you would earn a total of 4.00 from holding Nuveen Strategic Municipal or generate 0.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Nuveen Strategic Municipal vs. Franklin Federal Limited Term
Performance |
| Timeline |
| Nuveen Strategic Mun |
| Franklin Federal Lim |
Nuveen Strategic and Franklin Federal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nuveen Strategic and Franklin Federal
The main advantage of trading using opposite Nuveen Strategic and Franklin Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nuveen Strategic position performs unexpectedly, Franklin Federal 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 Franklin Federal will offset losses from the drop in Franklin Federal's long position.| Nuveen Strategic vs. Wilmington Diversified Income | Nuveen Strategic vs. Madison Diversified Income | Nuveen Strategic vs. Calvert Conservative Allocation | Nuveen Strategic vs. Global Diversified Income |
| Franklin Federal vs. Aqr Long Short Equity | Franklin Federal vs. Nuveen Core Equity | Franklin Federal vs. Transamerica International Equity | Franklin Federal vs. The Growth Equity |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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