Correlation Between Visa and Nuveen Municipal
Can any of the company-specific risk be diversified away by investing in both Visa 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 Visa and Nuveen Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Visa Class A and Nuveen Municipal High, you can compare the effects of market volatilities on Visa 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 Visa with a short position of Nuveen Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Nuveen Municipal.
Diversification Opportunities for Visa and Nuveen Municipal
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Visa and Nuveen is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A 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 Visa 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 Visa Class A 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 Visa i.e., Visa and Nuveen Municipal go up and down completely randomly.
Pair Corralation between Visa and Nuveen Municipal
Taking into account the 90-day investment horizon Visa Class A is expected to generate 2.55 times more return on investment than Nuveen Municipal. However, Visa is 2.55 times more volatile than Nuveen Municipal High. It trades about 0.09 of its potential returns per unit of risk. Nuveen Municipal High is currently generating about 0.06 per unit of risk. If you would invest 25,457 in Visa Class A on September 4, 2024 and sell it today you would earn a total of 6,208 from holding Visa Class A or generate 24.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Nuveen Municipal High
Performance |
| Timeline |
| Visa Class A |
| Nuveen Municipal High |
Visa and Nuveen Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Nuveen Municipal
The main advantage of trading using opposite Visa and Nuveen Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa 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.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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