Correlation Between California Bond and Nuveen Arizona
Can any of the company-specific risk be diversified away by investing in both California Bond and Nuveen Arizona 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 California Bond and Nuveen Arizona into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between California Bond Fund and Nuveen Arizona Municipal, you can compare the effects of market volatilities on California Bond and Nuveen Arizona 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 California Bond with a short position of Nuveen Arizona. Check out your portfolio center. Please also check ongoing floating volatility patterns of California Bond and Nuveen Arizona.
Diversification Opportunities for California Bond and Nuveen Arizona
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between California and NUVEEN is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding California Bond Fund and Nuveen Arizona Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Arizona Municipal and California Bond 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 California Bond Fund are associated (or correlated) with Nuveen Arizona. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Arizona Municipal has no effect on the direction of California Bond i.e., California Bond and Nuveen Arizona go up and down completely randomly.
Pair Corralation between California Bond and Nuveen Arizona
Assuming the 90 days horizon California Bond Fund is expected to generate 1.13 times more return on investment than Nuveen Arizona. However, California Bond is 1.13 times more volatile than Nuveen Arizona Municipal. It trades about 0.07 of its potential returns per unit of risk. Nuveen Arizona Municipal is currently generating about 0.07 per unit of risk. If you would invest 964.00 in California Bond Fund on September 2, 2024 and sell it today you would earn a total of 87.00 from holding California Bond Fund or generate 9.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
California Bond Fund vs. Nuveen Arizona Municipal
Performance |
| Timeline |
| California Bond |
| Nuveen Arizona Municipal |
California Bond and Nuveen Arizona Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with California Bond and Nuveen Arizona
The main advantage of trading using opposite California Bond and Nuveen Arizona positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California Bond position performs unexpectedly, Nuveen Arizona 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 Arizona will offset losses from the drop in Nuveen Arizona's long position.| California Bond vs. Tiaa Cref Lifestyle Moderate | California Bond vs. Fidelity Managed Retirement | California Bond vs. Transamerica Cleartrack Retirement | California Bond vs. Dimensional Retirement Income |
| Nuveen Arizona vs. Strategic Allocation Moderate | Nuveen Arizona vs. Saat Moderate Strategy | Nuveen Arizona vs. Tiaa Cref Lifestyle Moderate | Nuveen Arizona vs. Qs Moderate Growth |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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