Correlation Between Blackrock Muni and Nuveen Core

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

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

Diversification Opportunities for Blackrock Muni and Nuveen Core

-0.42

Correlation Coefficient

Blackrock Muni  Nuveen Core

Very good diversification

The 3 months correlation between Blackrock and Nuveen is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Muni Intermediate and Nuveen Core Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Core Equity and Blackrock Muni 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 Blackrock Muni Intermediate are associated (or correlated) with Nuveen Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Core Equity has no effect on the direction of Blackrock Muni i.e., Blackrock Muni and Nuveen Core go up and down completely randomly.

Pair Corralation between Blackrock Muni and Nuveen Core

Considering the 90-day investment horizon Blackrock Muni Intermediate is expected to under-perform the Nuveen Core. But the fund apears to be less risky and, when comparing its historical volatility, Blackrock Muni Intermediate is 1.25 times less risky than Nuveen Core. The fund trades about -0.09 of its potential returns per unit of risk. The Nuveen Core Equity is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,540  in Nuveen Core Equity on December 2, 2024 and sell it today you would earn a total of  5.00  from holding Nuveen Core Equity or generate 0.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	91.8%
Values	Daily Returns

Blackrock Muni Intermediate  vs.  Nuveen Core Equity

Blackrock Muni Inter

Risk-Adjusted Performance

Very 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.

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 rather sound fundamental indicators, Nuveen Core is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Blackrock Muni and Nuveen Core

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

The idea behind Blackrock Muni Intermediate and Nuveen Core Equity 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.