Correlation Between American Funds and Nuveen Minnesota
Can any of the company-specific risk be diversified away by investing in both American Funds 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 American Funds and Nuveen Minnesota into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds Retirement and Nuveen Minnesota Intermediate, you can compare the effects of market volatilities on American Funds 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 American Funds with a short position of Nuveen Minnesota. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Nuveen Minnesota.
Diversification Opportunities for American Funds and Nuveen Minnesota
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between American and Nuveen is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Retirement and Nuveen Minnesota Intermediate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Minnesota Int and American Funds 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 American Funds Retirement 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 Int has no effect on the direction of American Funds i.e., American Funds and Nuveen Minnesota go up and down completely randomly.
Pair Corralation between American Funds and Nuveen Minnesota
Assuming the 90 days horizon American Funds Retirement is expected to generate 2.33 times more return on investment than Nuveen Minnesota. However, American Funds is 2.33 times more volatile than Nuveen Minnesota Intermediate. It trades about 0.14 of its potential returns per unit of risk. Nuveen Minnesota Intermediate is currently generating about 0.16 per unit of risk. If you would invest 1,204 in American Funds Retirement on September 3, 2024 and sell it today you would earn a total of 81.00 from holding American Funds Retirement or generate 6.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds Retirement vs. Nuveen Minnesota Intermediate
Performance |
| Timeline |
| American Funds Retirement |
| Nuveen Minnesota Int |
American Funds and Nuveen Minnesota Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Nuveen Minnesota
The main advantage of trading using opposite American Funds and Nuveen Minnesota positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds 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.| American Funds vs. Dreyfusstandish Global Fixed | American Funds vs. Ab Global Real | American Funds vs. Ab Global Real | American Funds vs. Qs Global Equity |
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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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