Correlation Between Nuveen Municipal and Nuveen Core

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

Diversification Opportunities for Nuveen Municipal and Nuveen Core

-0.32

Correlation Coefficient

Nuveen Municipal  Nuveen Core

Very good diversification

The 3 months correlation between Nuveen and Nuveen is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Municipal Credit and Nuveen Core Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Core Equity 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 Nuveen Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Core Equity has no effect on the direction of Nuveen Municipal i.e., Nuveen Municipal and Nuveen Core go up and down completely randomly.

Pair Corralation between Nuveen Municipal and Nuveen Core

Given the investment horizon of 90 days Nuveen Municipal Credit is expected to under-perform the Nuveen Core. In addition to that, Nuveen Municipal is 1.01 times more volatile than Nuveen Core Equity. It trades about -0.15 of its total potential returns per unit of risk. Nuveen Core Equity is currently generating about 0.18 per unit of volatility. If you would invest  1,498  in Nuveen Core Equity on September 12, 2024 and sell it today you would earn a total of  116.00  from holding Nuveen Core Equity or generate 7.74% return on investment over 90 days.

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

Nuveen Municipal Credit  vs.  Nuveen Core Equity

Nuveen Municipal Credit

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nuveen Municipal Credit has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest fragile performance, the Fund's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the fund investors.

Nuveen Core Equity

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Core Equity are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather fragile fundamental indicators, Nuveen Core may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Nuveen Municipal and Nuveen Core

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

The idea behind Nuveen Municipal Credit and Nuveen Core Equity 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.