Correlation Between Ab Bond and Nuveen Preferred
Can any of the company-specific risk be diversified away by investing in both Ab Bond and Nuveen Preferred 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 Ab Bond and Nuveen Preferred into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Bond Inflation and Nuveen Preferred Securities, you can compare the effects of market volatilities on Ab Bond and Nuveen Preferred 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 Ab Bond with a short position of Nuveen Preferred. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Bond and Nuveen Preferred.
Diversification Opportunities for Ab Bond and Nuveen Preferred
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between ABNCX and NUVEEN is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Ab Bond Inflation and Nuveen Preferred Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Preferred Sec and Ab 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 Ab Bond Inflation are associated (or correlated) with Nuveen Preferred. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Preferred Sec has no effect on the direction of Ab Bond i.e., Ab Bond and Nuveen Preferred go up and down completely randomly.
Pair Corralation between Ab Bond and Nuveen Preferred
Assuming the 90 days horizon Ab Bond Inflation is expected to under-perform the Nuveen Preferred. In addition to that, Ab Bond is 1.02 times more volatile than Nuveen Preferred Securities. It trades about -0.03 of its total potential returns per unit of risk. Nuveen Preferred Securities is currently generating about 0.14 per unit of volatility. If you would invest 1,544 in Nuveen Preferred Securities on September 6, 2024 and sell it today you would earn a total of 24.00 from holding Nuveen Preferred Securities or generate 1.55% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Ab Bond Inflation vs. Nuveen Preferred Securities
Performance |
Timeline |
Ab Bond Inflation |
Nuveen Preferred Sec |
Ab Bond and Nuveen Preferred Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ab Bond and Nuveen Preferred
The main advantage of trading using opposite Ab Bond and Nuveen Preferred positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Bond position performs unexpectedly, Nuveen Preferred 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 Preferred will offset losses from the drop in Nuveen Preferred's long position.Ab Bond vs. American Century High | Ab Bond vs. Fidelity Capital Income | Ab Bond vs. Dunham High Yield | Ab Bond vs. Gmo High Yield |
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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