Correlation Between Nuveen Core and Blackrock Muni

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

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

Diversification Opportunities for Nuveen Core and Blackrock Muni

0.3

Correlation Coefficient

Nuveen Core  Blackrock Muni

Weak diversification

The 3 months correlation between Nuveen and Blackrock is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Core Equity and Blackrock Muni Intermediate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Muni Inter and Nuveen Core 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 Core Equity are associated (or correlated) with Blackrock Muni. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Muni Inter has no effect on the direction of Nuveen Core i.e., Nuveen Core and Blackrock Muni go up and down completely randomly.

Pair Corralation between Nuveen Core and Blackrock Muni

Considering the 90-day investment horizon Nuveen Core Equity is expected to under-perform the Blackrock Muni. In addition to that, Nuveen Core is 1.34 times more volatile than Blackrock Muni Intermediate. It trades about -0.11 of its total potential returns per unit of risk. Blackrock Muni Intermediate is currently generating about 0.02 per unit of volatility. If you would invest  1,205  in Blackrock Muni Intermediate on December 28, 2024 and sell it today you would earn a total of  4.00  from holding Blackrock Muni Intermediate or generate 0.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	60.66%
Values	Daily Returns

Nuveen Core Equity  vs.  Blackrock Muni Intermediate

Nuveen Core Equity

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nuveen Core Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest fragile performance, the Fund's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

Blackrock Muni Inter

Risk-Adjusted Performance

Weak

Over the last 90 days Blackrock Muni Intermediate has generated negative risk-adjusted returns adding no value to fund investors. Despite fairly strong basic indicators, Blackrock Muni is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Nuveen Core and Blackrock Muni

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

The idea behind Nuveen Core Equity and Blackrock Muni Intermediate 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.