Correlation Between Nuveen California and MFS Government
Can any of the company-specific risk be diversified away by investing in both Nuveen California and MFS Government 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 MFS Government 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 MFS Government Markets, you can compare the effects of market volatilities on Nuveen California and MFS Government 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 MFS Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen California and MFS Government.
Diversification Opportunities for Nuveen California and MFS Government
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Nuveen and MFS is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen California Select and MFS Government Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFS Government Markets 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 MFS Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFS Government Markets has no effect on the direction of Nuveen California i.e., Nuveen California and MFS Government go up and down completely randomly.
Pair Corralation between Nuveen California and MFS Government
Considering the 90-day investment horizon Nuveen California Select is expected to generate 0.96 times more return on investment than MFS Government. However, Nuveen California Select is 1.04 times less risky than MFS Government. It trades about -0.06 of its potential returns per unit of risk. MFS Government Markets is currently generating about -0.11 per unit of risk. If you would invest 1,353 in Nuveen California Select on August 28, 2024 and sell it today you would lose (11.00) from holding Nuveen California Select or give up 0.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nuveen California Select vs. MFS Government Markets
Performance |
| Timeline |
| Nuveen California Select |
| MFS Government Markets |
Nuveen California and MFS Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nuveen California and MFS Government
The main advantage of trading using opposite Nuveen California and MFS Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nuveen California position performs unexpectedly, MFS Government 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 MFS Government will offset losses from the drop in MFS Government's long position.| Nuveen California vs. PowerUp Acquisition Corp | Nuveen California vs. Aurora Innovation | Nuveen California vs. HUMANA INC | Nuveen California vs. Aquagold International |
| MFS Government vs. MFS Investment Grade | MFS Government vs. Invesco High Income | MFS Government vs. Eaton Vance National | MFS Government vs. Nuveen California Select |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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