Correlation Between Boston Partners and Nuveen Municipal

Can any of the company-specific risk be diversified away by investing in both Boston Partners 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 Boston Partners and Nuveen Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Boston Partners Longshort and Nuveen Municipal Credit, you can compare the effects of market volatilities on Boston Partners 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 Boston Partners with a short position of Nuveen Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Partners and Nuveen Municipal.

Diversification Opportunities for Boston Partners and Nuveen Municipal

-0.48

Correlation Coefficient

Boston Partners  Nuveen Municipal

Very good diversification

The 3 months correlation between Boston and Nuveen is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Boston Partners Longshort and Nuveen Municipal Credit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Municipal Credit and Boston Partners 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 Boston Partners Longshort 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 Credit has no effect on the direction of Boston Partners i.e., Boston Partners and Nuveen Municipal go up and down completely randomly.

Pair Corralation between Boston Partners and Nuveen Municipal

Assuming the 90 days horizon Boston Partners Longshort is expected to under-perform the Nuveen Municipal. In addition to that, Boston Partners is 1.45 times more volatile than Nuveen Municipal Credit. It trades about -0.1 of its total potential returns per unit of risk. Nuveen Municipal Credit is currently generating about 0.37 per unit of volatility. If you would invest  1,180  in Nuveen Municipal Credit on September 14, 2024 and sell it today you would earn a total of  24.00  from holding Nuveen Municipal Credit or generate 2.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Boston Partners Longshort  vs.  Nuveen Municipal Credit

Boston Partners Longshort

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Boston Partners Longshort are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Boston Partners is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Nuveen Municipal Credit

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nuveen Municipal Credit has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Nuveen Municipal is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Boston Partners and Nuveen Municipal

The main advantage of trading using opposite Boston Partners and Nuveen Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Partners 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.

The idea behind Boston Partners Longshort and Nuveen Municipal Credit pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.