Correlation Between Nuveen Amt-free and Western Asset
Can any of the company-specific risk be diversified away by investing in both Nuveen Amt-free and Western Asset 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 Amt-free and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nuveen Amt Free Municipal and Western Asset Municipal, you can compare the effects of market volatilities on Nuveen Amt-free and Western Asset 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 Amt-free with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen Amt-free and Western Asset.
Diversification Opportunities for Nuveen Amt-free and Western Asset
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Nuveen and Western is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Amt Free Municipal and Western Asset Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Municipal and Nuveen Amt-free 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 Amt Free Municipal are associated (or correlated) with Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Municipal has no effect on the direction of Nuveen Amt-free i.e., Nuveen Amt-free and Western Asset go up and down completely randomly.
Pair Corralation between Nuveen Amt-free and Western Asset
Considering the 90-day investment horizon Nuveen Amt-free is expected to generate 6.19 times less return on investment than Western Asset. In addition to that, Nuveen Amt-free is 1.15 times more volatile than Western Asset Municipal. It trades about 0.02 of its total potential returns per unit of risk. Western Asset Municipal is currently generating about 0.13 per unit of volatility. If you would invest 694.00 in Western Asset Municipal on August 28, 2024 and sell it today you would earn a total of 11.00 from holding Western Asset Municipal or generate 1.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nuveen Amt Free Municipal vs. Western Asset Municipal
Performance |
| Timeline |
| Nuveen Amt Free |
| Western Asset Municipal |
Nuveen Amt-free and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nuveen Amt-free and Western Asset
The main advantage of trading using opposite Nuveen Amt-free and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nuveen Amt-free position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset's long position.| Nuveen Amt-free vs. DTF Tax Free | Nuveen Amt-free vs. MFS High Yield | Nuveen Amt-free vs. MFS High Income | Nuveen Amt-free vs. John Hancock Income |
| Western Asset vs. Western Asset Managed | Western Asset vs. Blackrock Muniholdings Quality | Western Asset vs. DTF Tax Free | Western Asset 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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