Correlation Between Nuveen Strategic and California Municipal
Can any of the company-specific risk be diversified away by investing in both Nuveen Strategic and California 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 Strategic and California Municipal 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 California Municipal Portfolio, you can compare the effects of market volatilities on Nuveen Strategic and California 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 Strategic with a short position of California Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen Strategic and California Municipal.
Diversification Opportunities for Nuveen Strategic and California Municipal
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Nuveen and California is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Strategic Municipal and California Municipal Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on California Municipal 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 California Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of California Municipal has no effect on the direction of Nuveen Strategic i.e., Nuveen Strategic and California Municipal go up and down completely randomly.
Pair Corralation between Nuveen Strategic and California Municipal
Assuming the 90 days horizon Nuveen Strategic Municipal is expected to generate 1.7 times more return on investment than California Municipal. However, Nuveen Strategic is 1.7 times more volatile than California Municipal Portfolio. It trades about 0.07 of its potential returns per unit of risk. California Municipal Portfolio is currently generating about 0.07 per unit of risk. If you would invest 910.00 in Nuveen Strategic Municipal on October 27, 2024 and sell it today you would earn a total of 85.00 from holding Nuveen Strategic Municipal or generate 9.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nuveen Strategic Municipal vs. California Municipal Portfolio
Performance |
| Timeline |
| Nuveen Strategic Mun |
| California Municipal |
Nuveen Strategic and California Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nuveen Strategic and California Municipal
The main advantage of trading using opposite Nuveen Strategic and California Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nuveen Strategic position performs unexpectedly, California 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 California Municipal will offset losses from the drop in California Municipal's long position.| Nuveen Strategic vs. Growth Strategy Fund | Nuveen Strategic vs. Embark Commodity Strategy | Nuveen Strategic vs. Commodities Strategy Fund | Nuveen Strategic vs. Pimco Moditiesplus Strategy |
| California Municipal vs. Artisan High Income | California Municipal vs. Franklin Government Money | California Municipal vs. Ab Bond Inflation | California Municipal vs. Blrc Sgy Mnp |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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