Correlation Between Nuveen Arizona and Intermediate Term

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

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

Diversification Opportunities for Nuveen Arizona and Intermediate Term

0.86

Correlation Coefficient

Nuveen Arizona  Intermediate Term

Very poor diversification

The 3 months correlation between Nuveen and Intermediate is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Arizona Municipal and Intermediate Term Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intermediate Term Bond and Nuveen Arizona 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 Arizona Municipal are associated (or correlated) with Intermediate Term. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intermediate Term Bond has no effect on the direction of Nuveen Arizona i.e., Nuveen Arizona and Intermediate Term go up and down completely randomly.

Pair Corralation between Nuveen Arizona and Intermediate Term

Assuming the 90 days horizon Nuveen Arizona Municipal is expected to under-perform the Intermediate Term. But the mutual fund apears to be less risky and, when comparing its historical volatility, Nuveen Arizona Municipal is 1.12 times less risky than Intermediate Term. The mutual fund trades about -0.04 of its potential returns per unit of risk. The Intermediate Term Bond Fund is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  911.00  in Intermediate Term Bond Fund on October 22, 2024 and sell it today you would lose (7.00) from holding Intermediate Term Bond Fund or give up 0.77% of portfolio value over 90 days.

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

Nuveen Arizona Municipal  vs.  Intermediate Term Bond Fund

Nuveen Arizona Municipal

Risk-Adjusted Performance

0 of 100

Very Weak

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

Intermediate Term Bond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intermediate Term Bond Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental drivers, Intermediate Term 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 Arizona and Intermediate Term

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

The idea behind Nuveen Arizona Municipal and Intermediate Term Bond Fund 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.