Correlation Between Nuveen Municipal and Nuveen Dividend
Can any of the company-specific risk be diversified away by investing in both Nuveen Municipal and Nuveen Dividend 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 Nuveen Dividend into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nuveen Municipal Credit and Nuveen Dividend Advantage, you can compare the effects of market volatilities on Nuveen Municipal and Nuveen Dividend 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 Nuveen Dividend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen Municipal and Nuveen Dividend.
Diversification Opportunities for Nuveen Municipal and Nuveen Dividend
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Nuveen and Nuveen is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Municipal Credit and Nuveen Dividend Advantage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Dividend Advantage 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 Credit are associated (or correlated) with Nuveen Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Dividend Advantage has no effect on the direction of Nuveen Municipal i.e., Nuveen Municipal and Nuveen Dividend go up and down completely randomly.
Pair Corralation between Nuveen Municipal and Nuveen Dividend
Considering the 90-day investment horizon Nuveen Municipal Credit is expected to generate 1.49 times more return on investment than Nuveen Dividend. However, Nuveen Municipal is 1.49 times more volatile than Nuveen Dividend Advantage. It trades about 0.22 of its potential returns per unit of risk. Nuveen Dividend Advantage is currently generating about 0.01 per unit of risk. If you would invest 1,226 in Nuveen Municipal Credit on November 3, 2024 and sell it today you would earn a total of 32.00 from holding Nuveen Municipal Credit or generate 2.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nuveen Municipal Credit vs. Nuveen Dividend Advantage
Performance |
| Timeline |
| Nuveen Municipal Credit |
| Nuveen Dividend Advantage |
Nuveen Municipal and Nuveen Dividend Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nuveen Municipal and Nuveen Dividend
The main advantage of trading using opposite Nuveen Municipal and Nuveen Dividend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nuveen Municipal position performs unexpectedly, Nuveen Dividend 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 Dividend will offset losses from the drop in Nuveen Dividend's long position.| Nuveen Municipal vs. Nuveen Amt Free Municipal | Nuveen Municipal vs. Nuveen Dividend Advantage | Nuveen Municipal vs. Nuveen Municipal High | Nuveen Municipal vs. Nuveen Municipal Credit |
| Nuveen Dividend vs. Nuveen Amt Free | Nuveen Dividend vs. Nuveen Municipal Credit | Nuveen Dividend vs. Nuveen Municipal Value | Nuveen Dividend vs. Nuveen Municipal High |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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