Correlation Between China Fund and Nuveen Missouri

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

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

Diversification Opportunities for China Fund and Nuveen Missouri

0.11

Correlation Coefficient

China Fund  Nuveen Missouri

Average diversification

The 3 months correlation between China and Nuveen is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding China Fund and Nuveen Missouri Quality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Missouri Quality and China Fund 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 China Fund are associated (or correlated) with Nuveen Missouri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Missouri Quality has no effect on the direction of China Fund i.e., China Fund and Nuveen Missouri go up and down completely randomly.

Pair Corralation between China Fund and Nuveen Missouri

Considering the 90-day investment horizon China Fund is expected to under-perform the Nuveen Missouri. In addition to that, China Fund is 1.26 times more volatile than Nuveen Missouri Quality. It trades about -0.02 of its total potential returns per unit of risk. Nuveen Missouri Quality is currently generating about 0.19 per unit of volatility. If you would invest  1,061  in Nuveen Missouri Quality on September 12, 2024 and sell it today you would earn a total of  78.00  from holding Nuveen Missouri Quality or generate 7.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

China Fund  vs.  Nuveen Missouri Quality

China Fund

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in China Fund are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of very unsteady technical indicators, China Fund displayed solid returns over the last few months and may actually be approaching a breakup point.

Nuveen Missouri Quality

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with China Fund and Nuveen Missouri

The main advantage of trading using opposite China Fund and Nuveen Missouri positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Fund position performs unexpectedly, Nuveen Missouri 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 Missouri will offset losses from the drop in Nuveen Missouri's long position.

The idea behind China Fund and Nuveen Missouri Quality 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.