Correlation Between California Bond and Nuveen Strategic
Can any of the company-specific risk be diversified away by investing in both California Bond and Nuveen Strategic 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 Strategic 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 Strategic Municipal, you can compare the effects of market volatilities on California Bond and Nuveen Strategic 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 Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of California Bond and Nuveen Strategic.
Diversification Opportunities for California Bond and Nuveen Strategic
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between California and Nuveen is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding California Bond Fund and Nuveen Strategic Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Strategic Mun 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 Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Strategic Mun has no effect on the direction of California Bond i.e., California Bond and Nuveen Strategic go up and down completely randomly.
Pair Corralation between California Bond and Nuveen Strategic
Assuming the 90 days horizon California Bond is expected to generate 3.03 times less return on investment than Nuveen Strategic. In addition to that, California Bond is 1.1 times more volatile than Nuveen Strategic Municipal. It trades about 0.04 of its total potential returns per unit of risk. Nuveen Strategic Municipal is currently generating about 0.13 per unit of volatility. If you would invest 991.00 in Nuveen Strategic Municipal on October 25, 2024 and sell it today you would earn a total of 6.00 from holding Nuveen Strategic Municipal or generate 0.61% 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 Strategic Municipal
Performance |
| Timeline |
| California Bond |
| Nuveen Strategic Mun |
California Bond and Nuveen Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with California Bond and Nuveen Strategic
The main advantage of trading using opposite California Bond and Nuveen Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California Bond position performs unexpectedly, Nuveen Strategic 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 Strategic will offset losses from the drop in Nuveen Strategic's long position.| California Bond vs. Franklin California Tax Free | California Bond vs. Franklin California Tax Free | California Bond vs. Franklin California Tax Free | California Bond vs. Franklin California Tax Free |
| Nuveen Strategic vs. Vanguard Financials Index | Nuveen Strategic vs. Davis Financial Fund | Nuveen Strategic vs. Financials Ultrasector Profund | Nuveen Strategic vs. Fidelity Advisor Financial |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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