Correlation Between Nuveen Municipal and CBH

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

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

Diversification Opportunities for Nuveen Municipal and CBH

-0.7

Correlation Coefficient

Nuveen Municipal  CBH

Excellent diversification

The 3 months correlation between Nuveen and CBH is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Municipal Credit and CBH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CBH and Nuveen 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 Nuveen Municipal Credit are associated (or correlated) with CBH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CBH has no effect on the direction of Nuveen Municipal i.e., Nuveen Municipal and CBH go up and down completely randomly.

Pair Corralation between Nuveen Municipal and CBH

If you would invest  1,126  in Nuveen Municipal Credit on September 2, 2024 and sell it today you would earn a total of  6.00  from holding Nuveen Municipal Credit or generate 0.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	1.56%
Values	Daily Returns

Nuveen Municipal Credit  vs.  CBH

Nuveen Municipal Credit

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Municipal Credit are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of very healthy fundamental indicators, Nuveen Municipal is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

CBH

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CBH has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental drivers, CBH is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Nuveen Municipal and CBH

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

The idea behind Nuveen Municipal Credit and CBH 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.