Correlation Between Nuveen Municipal and Bny Mellon
Can any of the company-specific risk be diversified away by investing in both Nuveen Municipal and Bny Mellon 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 Bny Mellon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nuveen Municipal Value and Bny Mellon Strategic, you can compare the effects of market volatilities on Nuveen Municipal and Bny Mellon 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 Bny Mellon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen Municipal and Bny Mellon.
Diversification Opportunities for Nuveen Municipal and Bny Mellon
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nuveen and Bny is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Municipal Value and Bny Mellon Strategic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bny Mellon Strategic 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 Value are associated (or correlated) with Bny Mellon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bny Mellon Strategic has no effect on the direction of Nuveen Municipal i.e., Nuveen Municipal and Bny Mellon go up and down completely randomly.
Pair Corralation between Nuveen Municipal and Bny Mellon
Considering the 90-day investment horizon Nuveen Municipal is expected to generate 1.4 times less return on investment than Bny Mellon. But when comparing it to its historical volatility, Nuveen Municipal Value is 1.22 times less risky than Bny Mellon. It trades about 0.08 of its potential returns per unit of risk. Bny Mellon Strategic is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 539.00 in Bny Mellon Strategic on September 2, 2024 and sell it today you would earn a total of 75.00 from holding Bny Mellon Strategic or generate 13.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nuveen Municipal Value vs. Bny Mellon Strategic
Performance |
| Timeline |
| Nuveen Municipal Value |
| Bny Mellon Strategic |
Nuveen Municipal and Bny Mellon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nuveen Municipal and Bny Mellon
The main advantage of trading using opposite Nuveen Municipal and Bny Mellon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nuveen Municipal position performs unexpectedly, Bny Mellon 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 Bny Mellon will offset losses from the drop in Bny Mellon's long position.| Nuveen Municipal vs. Nuveen Amt Free Municipal | Nuveen Municipal vs. Nuveen Municipal Credit | Nuveen Municipal vs. Nuveen Amt Free | Nuveen Municipal vs. Nuveen Municipal High |
| Bny Mellon vs. Western Asset Managed | Bny Mellon vs. Blackrock Muniholdings Quality | Bny Mellon vs. DTF Tax Free | Bny Mellon vs. John Hancock Income |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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