Correlation Between Nuveen All and Municipal Total

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

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

Diversification Opportunities for Nuveen All and Municipal Total

0.98

Correlation Coefficient

Nuveen All  Municipal Total

Almost no diversification

The 3 months correlation between Nuveen and Municipal is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen All American Municipal and Municipal Total Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Municipal Total Return and Nuveen All 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 Nuveen All American Municipal are associated (or correlated) with Municipal Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Municipal Total Return has no effect on the direction of Nuveen All i.e., Nuveen All and Municipal Total go up and down completely randomly.

Pair Corralation between Nuveen All and Municipal Total

Assuming the 90 days horizon Nuveen All American Municipal is expected to generate 1.14 times more return on investment than Municipal Total. However, Nuveen All is 1.14 times more volatile than Municipal Total Return. It trades about 0.06 of its potential returns per unit of risk. Municipal Total Return is currently generating about 0.06 per unit of risk. If you would invest  1,006  in Nuveen All American Municipal on September 15, 2024 and sell it today you would earn a total of  18.00  from holding Nuveen All American Municipal or generate 1.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	99.21%
Values	Daily Returns

Nuveen All American Municipal  vs.  Municipal Total Return

Nuveen All American

Risk-Adjusted Performance

0 of 100

Very Weak

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

Municipal Total Return

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Nuveen All and Municipal Total

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

The idea behind Nuveen All American Municipal and Municipal Total Return 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.