Correlation Between Pimco Municipal and Nuveen New
Can any of the company-specific risk be diversified away by investing in both Pimco Municipal and Nuveen New 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 Pimco Municipal and Nuveen New into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pimco Municipal Income and Nuveen New York, you can compare the effects of market volatilities on Pimco Municipal and Nuveen New 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 Pimco Municipal with a short position of Nuveen New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Municipal and Nuveen New.
Diversification Opportunities for Pimco Municipal and Nuveen New
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pimco and Nuveen is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Municipal Income and Nuveen New York in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen New York and Pimco 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 Pimco Municipal Income are associated (or correlated) with Nuveen New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen New York has no effect on the direction of Pimco Municipal i.e., Pimco Municipal and Nuveen New go up and down completely randomly.
Pair Corralation between Pimco Municipal and Nuveen New
Considering the 90-day investment horizon Pimco Municipal Income is expected to under-perform the Nuveen New. In addition to that, Pimco Municipal is 1.64 times more volatile than Nuveen New York. It trades about -0.01 of its total potential returns per unit of risk. Nuveen New York is currently generating about 0.06 per unit of volatility. If you would invest 973.00 in Nuveen New York on September 2, 2024 and sell it today you would earn a total of 189.00 from holding Nuveen New York or generate 19.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pimco Municipal Income vs. Nuveen New York
Performance |
| Timeline |
| Pimco Municipal Income |
| Nuveen New York |
Pimco Municipal and Nuveen New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco Municipal and Nuveen New
The main advantage of trading using opposite Pimco Municipal and Nuveen New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Municipal position performs unexpectedly, Nuveen New 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 New will offset losses from the drop in Nuveen New's long position.| Pimco Municipal vs. MFS Investment Grade | Pimco Municipal vs. Eaton Vance Municipal | Pimco Municipal vs. DTF Tax Free | Pimco Municipal vs. Aquagold International |
| Nuveen New vs. Pimco New York | Nuveen New vs. Pimco California Municipal | Nuveen New vs. Pimco Municipal Income | Nuveen New vs. Pimco California Municipal |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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