Correlation Between Municipal Bond and Nuveen High
Can any of the company-specific risk be diversified away by investing in both Municipal Bond and Nuveen High 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 Municipal Bond and Nuveen High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Municipal Bond Fund and Nuveen High Yield, you can compare the effects of market volatilities on Municipal Bond and Nuveen High 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 Municipal Bond with a short position of Nuveen High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Municipal Bond and Nuveen High.
Diversification Opportunities for Municipal Bond and Nuveen High
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Municipal and NUVEEN is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Municipal Bond Fund and Nuveen High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen High Yield and Municipal 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 Municipal Bond Fund are associated (or correlated) with Nuveen High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen High Yield has no effect on the direction of Municipal Bond i.e., Municipal Bond and Nuveen High go up and down completely randomly.
Pair Corralation between Municipal Bond and Nuveen High
Assuming the 90 days horizon Municipal Bond is expected to generate 1.17 times less return on investment than Nuveen High. But when comparing it to its historical volatility, Municipal Bond Fund is 1.9 times less risky than Nuveen High. It trades about 0.07 of its potential returns per unit of risk. Nuveen High Yield is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,377 in Nuveen High Yield on August 26, 2024 and sell it today you would earn a total of 121.00 from holding Nuveen High Yield or generate 8.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Municipal Bond Fund vs. Nuveen High Yield
Performance |
| Timeline |
| Municipal Bond |
| Nuveen High Yield |
Municipal Bond and Nuveen High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Municipal Bond and Nuveen High
The main advantage of trading using opposite Municipal Bond and Nuveen High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Municipal Bond position performs unexpectedly, Nuveen High 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 High will offset losses from the drop in Nuveen High's long position.| Municipal Bond vs. Wells Fargo Advantage | Municipal Bond vs. Wells Fargo Advantage | Municipal Bond vs. Wells Fargo Advantage | Municipal Bond vs. Wells Fargo Ultra |
| Nuveen High vs. Oppenheimer Roc High | Nuveen High vs. Nuveen All American Municipal | Nuveen High vs. Nuveen Short Duration High | Nuveen High vs. Nuveen High Yield |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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