Correlation Between Nuveen Amt and Dnp Select

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

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

Diversification Opportunities for Nuveen Amt and Dnp Select

0.71

Correlation Coefficient

Nuveen Amt  Dnp Select

Poor diversification

The 3 months correlation between Nuveen and DNP is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Amt Free Municipal and Dnp Select Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dnp Select Income and Nuveen Amt 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 Amt Free Municipal are associated (or correlated) with Dnp Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dnp Select Income has no effect on the direction of Nuveen Amt i.e., Nuveen Amt and Dnp Select go up and down completely randomly.

Pair Corralation between Nuveen Amt and Dnp Select

Considering the 90-day investment horizon Nuveen Amt is expected to generate 4.35 times less return on investment than Dnp Select. But when comparing it to its historical volatility, Nuveen Amt Free Municipal is 2.1 times less risky than Dnp Select. It trades about 0.09 of its potential returns per unit of risk. Dnp Select Income is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  881.00  in Dnp Select Income on December 27, 2024 and sell it today you would earn a total of  95.00  from holding Dnp Select Income or generate 10.78% return on investment over 90 days.

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

Nuveen Amt Free Municipal  vs.  Dnp Select Income

Nuveen Amt Free

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Amt Free Municipal are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong technical and fundamental indicators, Nuveen Amt is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Dnp Select Income

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dnp Select Income are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. Even with relatively fragile basic indicators, Dnp Select may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Nuveen Amt and Dnp Select

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

The idea behind Nuveen Amt Free Municipal and Dnp Select Income 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.