Correlation Between Nuveen California and Nuveen Preferred
Can any of the company-specific risk be diversified away by investing in both Nuveen California and Nuveen Preferred 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 California and Nuveen Preferred into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nuveen California Select and Nuveen Preferred and, you can compare the effects of market volatilities on Nuveen California and Nuveen Preferred 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 California with a short position of Nuveen Preferred. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen California and Nuveen Preferred.
Diversification Opportunities for Nuveen California and Nuveen Preferred
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Nuveen and Nuveen is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen California Select and Nuveen Preferred and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Preferred and Nuveen California 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 California Select are associated (or correlated) with Nuveen Preferred. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Preferred has no effect on the direction of Nuveen California i.e., Nuveen California and Nuveen Preferred go up and down completely randomly.
Pair Corralation between Nuveen California and Nuveen Preferred
Considering the 90-day investment horizon Nuveen California is expected to generate 10.32 times less return on investment than Nuveen Preferred. But when comparing it to its historical volatility, Nuveen California Select is 1.04 times less risky than Nuveen Preferred. It trades about 0.02 of its potential returns per unit of risk. Nuveen Preferred and is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,925 in Nuveen Preferred and on September 2, 2024 and sell it today you would earn a total of 131.00 from holding Nuveen Preferred and or generate 6.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nuveen California Select vs. Nuveen Preferred and
Performance |
| Timeline |
| Nuveen California Select |
| Nuveen Preferred |
Nuveen California and Nuveen Preferred Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nuveen California and Nuveen Preferred
The main advantage of trading using opposite Nuveen California and Nuveen Preferred positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nuveen California position performs unexpectedly, Nuveen Preferred 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 Preferred will offset losses from the drop in Nuveen Preferred's long position.| Nuveen California vs. Eaton Vance National | Nuveen California vs. Invesco High Income | Nuveen California vs. Blackrock Muniholdings Ny | Nuveen California vs. MFS Investment Grade |
| Nuveen Preferred vs. Tekla World Healthcare | Nuveen Preferred vs. Tekla Healthcare Investors | Nuveen Preferred vs. Tekla Life Sciences | Nuveen Preferred vs. Cohen And Steers |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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