Correlation Between Nuveen Preferred and Invesco Municipal

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

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

Diversification Opportunities for Nuveen Preferred and Invesco Municipal

0.06

Correlation Coefficient

Nuveen Preferred  Invesco Municipal

Significant diversification

The 3 months correlation between Nuveen and Invesco is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Preferred And and Invesco Municipal Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Municipal Trust and Nuveen Preferred 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 Preferred And are associated (or correlated) with Invesco Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Municipal Trust has no effect on the direction of Nuveen Preferred i.e., Nuveen Preferred and Invesco Municipal go up and down completely randomly.

Pair Corralation between Nuveen Preferred and Invesco Municipal

If you would invest  1,611  in Nuveen Preferred And on October 7, 2024 and sell it today you would earn a total of  0.00  from holding Nuveen Preferred And or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	5.0%
Values	Daily Returns

Nuveen Preferred And  vs.  Invesco Municipal Trust

Nuveen Preferred And

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nuveen Preferred And has generated negative risk-adjusted returns adding no value to fund investors. In spite of comparatively stable basic indicators, Nuveen Preferred is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Invesco Municipal Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco Municipal Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward-looking signals, Invesco Municipal is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Nuveen Preferred and Invesco Municipal

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

The idea behind Nuveen Preferred And and Invesco Municipal Trust 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.