Correlation Between Federated Global and Nuveen Necticut

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

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

Diversification Opportunities for Federated Global and Nuveen Necticut

0.75

Correlation Coefficient

Federated Global  Nuveen Necticut

Poor diversification

The 3 months correlation between FEDERATED and Nuveen is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Federated Global Allocation and Nuveen Necticut Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Necticut Municipal and Federated Global 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 Federated Global Allocation are associated (or correlated) with Nuveen Necticut. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Necticut Municipal has no effect on the direction of Federated Global i.e., Federated Global and Nuveen Necticut go up and down completely randomly.

Pair Corralation between Federated Global and Nuveen Necticut

Assuming the 90 days horizon Federated Global Allocation is expected to under-perform the Nuveen Necticut. In addition to that, Federated Global is 2.36 times more volatile than Nuveen Necticut Municipal. It trades about -0.29 of its total potential returns per unit of risk. Nuveen Necticut Municipal is currently generating about -0.36 per unit of volatility. If you would invest  980.00  in Nuveen Necticut Municipal on October 10, 2024 and sell it today you would lose (19.00) from holding Nuveen Necticut Municipal or give up 1.94% of portfolio value over 90 days.

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

Federated Global Allocation  vs.  Nuveen Necticut Municipal

Federated Global All

Risk-Adjusted Performance

0 of 100

Very Weak

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

Nuveen Necticut Municipal

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Federated Global and Nuveen Necticut

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

The idea behind Federated Global Allocation and Nuveen Necticut Municipal 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 CEOs Directory module to screen CEOs from public companies around the world.