Correlation Between Nuveen California and Bny Mellon

Can any of the company-specific risk be diversified away by investing in both Nuveen California and Bny Mellon 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 Bny Mellon 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 Bny Mellon Mid, you can compare the effects of market volatilities on Nuveen California and Bny Mellon 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 Bny Mellon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen California and Bny Mellon.

Diversification Opportunities for Nuveen California and Bny Mellon

0.5

Correlation Coefficient

Nuveen California  Bny Mellon

Very weak diversification

The 3 months correlation between Nuveen and Bny is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen California Municipal and Bny Mellon Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bny Mellon Mid 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 Bny Mellon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bny Mellon Mid has no effect on the direction of Nuveen California i.e., Nuveen California and Bny Mellon go up and down completely randomly.

Pair Corralation between Nuveen California and Bny Mellon

Assuming the 90 days horizon Nuveen California Municipal is expected to generate 0.05 times more return on investment than Bny Mellon. However, Nuveen California Municipal is 20.69 times less risky than Bny Mellon. It trades about -0.35 of its potential returns per unit of risk. Bny Mellon Mid is currently generating about -0.27 per unit of risk. If you would invest  1,025  in Nuveen California Municipal on October 8, 2024 and sell it today you would lose (16.00) from holding Nuveen California Municipal or give up 1.56% of portfolio value over 90 days.

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

Nuveen California Municipal  vs.  Bny Mellon Mid

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.

Bny Mellon Mid

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bny Mellon Mid has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Nuveen California and Bny Mellon

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

The idea behind Nuveen California Municipal and Bny Mellon Mid 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.