Correlation Between Ab Small and Nuveen Municipal
Can any of the company-specific risk be diversified away by investing in both Ab Small 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 Ab Small and Nuveen Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Small Cap and Nuveen Municipal High, you can compare the effects of market volatilities on Ab Small 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 Ab Small with a short position of Nuveen Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Small and Nuveen Municipal.
Diversification Opportunities for Ab Small and Nuveen Municipal
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between QUAKX and Nuveen is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Ab Small Cap 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 Ab Small 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 Ab Small Cap 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 Ab Small i.e., Ab Small and Nuveen Municipal go up and down completely randomly.
Pair Corralation between Ab Small and Nuveen Municipal
Assuming the 90 days horizon Ab Small Cap is expected to generate 2.26 times more return on investment than Nuveen Municipal. However, Ab Small is 2.26 times more volatile than Nuveen Municipal High. It trades about 0.17 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 6,624 in Ab Small Cap on November 3, 2024 and sell it today you would earn a total of 300.00 from holding Ab Small Cap or generate 4.53% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Ab Small Cap vs. Nuveen Municipal High
Performance |
Timeline |
Ab Small Cap |
Nuveen Municipal High |
Ab Small and Nuveen Municipal Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ab Small and Nuveen Municipal
The main advantage of trading using opposite Ab Small and Nuveen Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Small 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.Ab Small vs. Ab Large Cap | Ab Small vs. Ab Small Cap | Ab Small vs. Ab Small Cap | Ab Small vs. Ab Small Cap |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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