Correlation Between CBH and Nuveen Municipal

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

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

Diversification Opportunities for CBH and Nuveen Municipal

0.0

Correlation Coefficient

CBH  Nuveen Municipal

Pay attention - limited upside

The 3 months correlation between CBH and Nuveen is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CBH 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 CBH 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 CBH 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 CBH i.e., CBH and Nuveen Municipal go up and down completely randomly.

Pair Corralation between CBH and Nuveen Municipal

If you would invest  1,085  in Nuveen Municipal Credit on November 29, 2024 and sell it today you would earn a total of  36.00  from holding Nuveen Municipal Credit or generate 3.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

CBH  vs.  Nuveen Municipal Credit

CBH

Risk-Adjusted Performance

Very Weak

Over the last 90 days CBH has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental drivers, CBH is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Nuveen Municipal Credit

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Municipal Credit are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of very healthy fundamental indicators, Nuveen Municipal is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with CBH and Nuveen Municipal

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

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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 .