Correlation Between Nuveen All-american and Prudential Jennison

Can any of the company-specific risk be diversified away by investing in both Nuveen All-american and Prudential Jennison 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-american and Prudential Jennison 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 Prudential Jennison Financial, you can compare the effects of market volatilities on Nuveen All-american and Prudential Jennison 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-american with a short position of Prudential Jennison. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen All-american and Prudential Jennison.

Diversification Opportunities for Nuveen All-american and Prudential Jennison

0.73

Correlation Coefficient

Nuveen All-american  Prudential Jennison

Poor diversification

The 3 months correlation between Nuveen and Prudential is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen All American Municipal and Prudential Jennison Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Jennison and Nuveen All-american 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 Prudential Jennison. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Jennison has no effect on the direction of Nuveen All-american i.e., Nuveen All-american and Prudential Jennison go up and down completely randomly.

Pair Corralation between Nuveen All-american and Prudential Jennison

Assuming the 90 days horizon Nuveen All American Municipal is expected to generate 0.25 times more return on investment than Prudential Jennison. However, Nuveen All American Municipal is 4.04 times less risky than Prudential Jennison. It trades about 0.2 of its potential returns per unit of risk. Prudential Jennison Financial is currently generating about -0.06 per unit of risk. If you would invest  1,007  in Nuveen All American Municipal on December 5, 2024 and sell it today you would earn a total of  9.00  from holding Nuveen All American Municipal or generate 0.89% return on investment over 90 days.

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

Nuveen All American Municipal  vs.  Prudential Jennison Financial

Nuveen All American

Risk-Adjusted Performance

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 fundamental indicators, Nuveen All-american is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Prudential Jennison

Risk-Adjusted Performance

Very Weak

Over the last 90 days Prudential Jennison Financial has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Nuveen All-american and Prudential Jennison

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

The idea behind Nuveen All American Municipal and Prudential Jennison Financial 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..