Correlation Between Nuveen Municipal and Clough Global

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

Diversification Opportunities for Nuveen Municipal and Clough Global

0.6

Correlation Coefficient

Nuveen Municipal  Clough Global

Poor diversification

The 3 months correlation between Nuveen and Clough is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Municipal Credit and Clough Global Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clough Global Allocation 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 Clough Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clough Global Allocation has no effect on the direction of Nuveen Municipal i.e., Nuveen Municipal and Clough Global go up and down completely randomly.

Pair Corralation between Nuveen Municipal and Clough Global

Given the investment horizon of 90 days Nuveen Municipal Credit is expected to generate 0.76 times more return on investment than Clough Global. However, Nuveen Municipal Credit is 1.31 times less risky than Clough Global. It trades about 0.11 of its potential returns per unit of risk. Clough Global Allocation is currently generating about 0.07 per unit of risk. If you would invest  1,030  in Nuveen Municipal Credit on December 28, 2024 and sell it today you would earn a total of  37.00  from holding Nuveen Municipal Credit or generate 3.59% return on investment over 90 days.

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

Nuveen Municipal Credit  vs.  Clough Global Allocation

Nuveen Municipal Credit

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Municipal Credit are ranked lower than 8 (%) 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.

Clough Global Allocation

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Clough Global Allocation are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly stable essential indicators, Clough Global is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Nuveen Municipal and Clough Global

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

The idea behind Nuveen Municipal Credit and Clough Global Allocation 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.