Correlation Between DWS Municipal and Nuveen Floating

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

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

Diversification Opportunities for DWS Municipal and Nuveen Floating

0.58

Correlation Coefficient

DWS Municipal  Nuveen Floating

Very weak diversification

The 3 months correlation between DWS and Nuveen is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding DWS Municipal Income and Nuveen Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Floating Rate and DWS Municipal 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 DWS Municipal Income are associated (or correlated) with Nuveen Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Floating Rate has no effect on the direction of DWS Municipal i.e., DWS Municipal and Nuveen Floating go up and down completely randomly.

Pair Corralation between DWS Municipal and Nuveen Floating

Considering the 90-day investment horizon DWS Municipal is expected to generate 1.29 times less return on investment than Nuveen Floating. In addition to that, DWS Municipal is 1.13 times more volatile than Nuveen Floating Rate. It trades about 0.12 of its total potential returns per unit of risk. Nuveen Floating Rate is currently generating about 0.17 per unit of volatility. If you would invest  864.00  in Nuveen Floating Rate on September 4, 2024 and sell it today you would earn a total of  50.00  from holding Nuveen Floating Rate or generate 5.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

DWS Municipal Income  vs.  Nuveen Floating Rate

DWS Municipal Income

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DWS Municipal Income are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, DWS Municipal is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Nuveen Floating Rate

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Floating Rate are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. Even with relatively invariable technical and fundamental indicators, Nuveen Floating is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with DWS Municipal and Nuveen Floating

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

The idea behind DWS Municipal Income and Nuveen Floating Rate 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.

Check out your portfolio center.

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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.