Correlation Between Nuveen California and Marsico Midcap

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

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

Diversification Opportunities for Nuveen California and Marsico Midcap

0.61

Correlation Coefficient

Nuveen California  Marsico Midcap

Poor diversification

The 3 months correlation between Nuveen and Marsico is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen California Municipal and Marsico Midcap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marsico Midcap Growth and Nuveen California 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 California Municipal are associated (or correlated) with Marsico Midcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marsico Midcap Growth has no effect on the direction of Nuveen California i.e., Nuveen California and Marsico Midcap go up and down completely randomly.

Pair Corralation between Nuveen California and Marsico Midcap

Assuming the 90 days horizon Nuveen California is expected to generate 8.02 times less return on investment than Marsico Midcap. But when comparing it to its historical volatility, Nuveen California Municipal is 4.72 times less risky than Marsico Midcap. It trades about 0.05 of its potential returns per unit of risk. Marsico Midcap Growth is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  3,344  in Marsico Midcap Growth on October 7, 2024 and sell it today you would earn a total of  1,796  from holding Marsico Midcap Growth or generate 53.71% return on investment over 90 days.

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

Nuveen California Municipal  vs.  Marsico Midcap Growth

Nuveen California

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nuveen California Municipal has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Nuveen California is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Marsico Midcap Growth

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Marsico Midcap Growth are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Marsico Midcap may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Nuveen California and Marsico Midcap

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

The idea behind Nuveen California Municipal and Marsico Midcap Growth 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.