Correlation Between Nuveen Municipal and Munivest Fund

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

Diversification Opportunities for Nuveen Municipal and Munivest Fund

0.88

Correlation Coefficient

Nuveen Municipal  Munivest Fund

Very poor diversification

The 3 months correlation between Nuveen and Munivest is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Municipal Credit and Munivest Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Munivest Fund 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 Munivest Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Munivest Fund has no effect on the direction of Nuveen Municipal i.e., Nuveen Municipal and Munivest Fund go up and down completely randomly.

Pair Corralation between Nuveen Municipal and Munivest Fund

Given the investment horizon of 90 days Nuveen Municipal Credit is expected to generate 0.83 times more return on investment than Munivest Fund. However, Nuveen Municipal Credit is 1.21 times less risky than Munivest Fund. It trades about 0.03 of its potential returns per unit of risk. Munivest Fund is currently generating about -0.03 per unit of risk. If you would invest  1,111  in Nuveen Municipal Credit on November 29, 2024 and sell it today you would earn a total of  10.00  from holding Nuveen Municipal Credit or generate 0.9% return on investment over 90 days.

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

Nuveen Municipal Credit  vs.  Munivest Fund

Nuveen Municipal Credit

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Municipal Credit are ranked lower than 2 (%) 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.

Munivest Fund

Risk-Adjusted Performance

Very Weak

Over the last 90 days Munivest Fund has generated negative risk-adjusted returns adding no value to fund investors. Despite nearly stable basic indicators, Munivest Fund is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Nuveen Municipal and Munivest Fund

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

The idea behind Nuveen Municipal Credit and Munivest Fund 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.