Correlation Between SPDR Nuveen and VanEck CEF

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

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

Diversification Opportunities for SPDR Nuveen and VanEck CEF

0.91

Correlation Coefficient

SPDR Nuveen  VanEck CEF

Almost no diversification

The 3 months correlation between SPDR and VanEck is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Nuveen Bloomberg and VanEck CEF Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck CEF Municipal and SPDR Nuveen 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 SPDR Nuveen Bloomberg are associated (or correlated) with VanEck CEF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck CEF Municipal has no effect on the direction of SPDR Nuveen i.e., SPDR Nuveen and VanEck CEF go up and down completely randomly.

Pair Corralation between SPDR Nuveen and VanEck CEF

Given the investment horizon of 90 days SPDR Nuveen Bloomberg is expected to generate 0.7 times more return on investment than VanEck CEF. However, SPDR Nuveen Bloomberg is 1.44 times less risky than VanEck CEF. It trades about 0.01 of its potential returns per unit of risk. VanEck CEF Municipal is currently generating about -0.03 per unit of risk. If you would invest  2,591  in SPDR Nuveen Bloomberg on December 5, 2024 and sell it today you would earn a total of  3.00  from holding SPDR Nuveen Bloomberg or generate 0.12% return on investment over 90 days.

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

SPDR Nuveen Bloomberg  vs.  VanEck CEF Municipal

SPDR Nuveen Bloomberg

Risk-Adjusted Performance

Very Weak

Over the last 90 days SPDR Nuveen Bloomberg has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong primary indicators, SPDR Nuveen is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

VanEck CEF Municipal

Risk-Adjusted Performance

Very Weak

Over the last 90 days VanEck CEF Municipal has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, VanEck CEF is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with SPDR Nuveen and VanEck CEF

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

The idea behind SPDR Nuveen Bloomberg and VanEck CEF 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.