Correlation Between Oak Ridge and Nuveen Municipal
Can any of the company-specific risk be diversified away by investing in both Oak Ridge and Nuveen Municipal 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 Oak Ridge and Nuveen Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oak Ridge Small and Nuveen Municipal High, you can compare the effects of market volatilities on Oak Ridge and Nuveen Municipal 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 Oak Ridge with a short position of Nuveen Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oak Ridge and Nuveen Municipal.
Diversification Opportunities for Oak Ridge and Nuveen Municipal
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Oak and Nuveen is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Oak Ridge Small and Nuveen Municipal High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Municipal High and Oak Ridge 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 Oak Ridge Small are associated (or correlated) with Nuveen Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Municipal High has no effect on the direction of Oak Ridge i.e., Oak Ridge and Nuveen Municipal go up and down completely randomly.
Pair Corralation between Oak Ridge and Nuveen Municipal
Assuming the 90 days horizon Oak Ridge Small is expected to generate 1.69 times more return on investment than Nuveen Municipal. However, Oak Ridge is 1.69 times more volatile than Nuveen Municipal High. It trades about 0.21 of its potential returns per unit of risk. Nuveen Municipal High is currently generating about 0.26 per unit of risk. If you would invest 823.00 in Oak Ridge Small on November 3, 2024 and sell it today you would earn a total of 35.00 from holding Oak Ridge Small or generate 4.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Oak Ridge Small vs. Nuveen Municipal High
Performance |
| Timeline |
| Oak Ridge Small |
| Nuveen Municipal High |
Oak Ridge and Nuveen Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oak Ridge and Nuveen Municipal
The main advantage of trading using opposite Oak Ridge and Nuveen Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oak Ridge position performs unexpectedly, Nuveen Municipal 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 Municipal will offset losses from the drop in Nuveen Municipal's long position.| Oak Ridge vs. Jp Morgan Smartretirement | Oak Ridge vs. Putnam Retirement Advantage | Oak Ridge vs. Calvert Moderate Allocation | Oak Ridge vs. Voya Retirement Servative |
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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