Correlation Between Federated Ohio and Nuveen Minnesota
Can any of the company-specific risk be diversified away by investing in both Federated Ohio and Nuveen Minnesota 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 Federated Ohio and Nuveen Minnesota into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Ohio Municipal and Nuveen Minnesota Municipal, you can compare the effects of market volatilities on Federated Ohio and Nuveen Minnesota 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 Federated Ohio with a short position of Nuveen Minnesota. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Ohio and Nuveen Minnesota.
Diversification Opportunities for Federated Ohio and Nuveen Minnesota
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between FEDERATED and Nuveen is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Federated Ohio Municipal and Nuveen Minnesota Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Minnesota Mun and Federated Ohio 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 Federated Ohio Municipal are associated (or correlated) with Nuveen Minnesota. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Minnesota Mun has no effect on the direction of Federated Ohio i.e., Federated Ohio and Nuveen Minnesota go up and down completely randomly.
Pair Corralation between Federated Ohio and Nuveen Minnesota
Assuming the 90 days horizon Federated Ohio is expected to generate 1.29 times less return on investment than Nuveen Minnesota. But when comparing it to its historical volatility, Federated Ohio Municipal is 1.04 times less risky than Nuveen Minnesota. It trades about 0.18 of its potential returns per unit of risk. Nuveen Minnesota Municipal is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 1,074 in Nuveen Minnesota Municipal on September 2, 2024 and sell it today you would earn a total of 16.00 from holding Nuveen Minnesota Municipal or generate 1.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Ohio Municipal vs. Nuveen Minnesota Municipal
Performance |
| Timeline |
| Federated Ohio Municipal |
| Nuveen Minnesota Mun |
Federated Ohio and Nuveen Minnesota Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Ohio and Nuveen Minnesota
The main advantage of trading using opposite Federated Ohio and Nuveen Minnesota positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Ohio position performs unexpectedly, Nuveen Minnesota 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 Minnesota will offset losses from the drop in Nuveen Minnesota's long position.| Federated Ohio vs. Federated Emerging Market | Federated Ohio vs. Federated Mdt All | Federated Ohio vs. Federated Mdt Balanced | Federated Ohio vs. Federated Global Allocation |
| Nuveen Minnesota vs. Nuveen Small Cap | Nuveen Minnesota vs. Nuveen Real Estate | Nuveen Minnesota vs. Nuveen Real Estate | Nuveen Minnesota vs. Nuveen Preferred Securities |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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