Correlation Between Nuveen Municipal and Allianzgi Convertible

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

Diversification Opportunities for Nuveen Municipal and Allianzgi Convertible

0.07

Correlation Coefficient

Nuveen Municipal  Allianzgi Convertible

Significant diversification

The 3 months correlation between Nuveen and Allianzgi is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Municipal Credit and Allianzgi Convertible Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allianzgi Convertible 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 Allianzgi Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allianzgi Convertible has no effect on the direction of Nuveen Municipal i.e., Nuveen Municipal and Allianzgi Convertible go up and down completely randomly.

Pair Corralation between Nuveen Municipal and Allianzgi Convertible

Given the investment horizon of 90 days Nuveen Municipal Credit is expected to generate 0.52 times more return on investment than Allianzgi Convertible. However, Nuveen Municipal Credit is 1.93 times less risky than Allianzgi Convertible. It trades about 0.11 of its potential returns per unit of risk. Allianzgi Convertible Income is currently generating about -0.08 per unit of risk. If you would invest  1,030  in Nuveen Municipal Credit on December 29, 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	Insignificant
Accuracy	100.0%
Values	Daily Returns

Nuveen Municipal Credit  vs.  Allianzgi Convertible Income

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.

Allianzgi Convertible

Risk-Adjusted Performance

Very Weak

Over the last 90 days Allianzgi Convertible Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Allianzgi Convertible is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nuveen Municipal and Allianzgi Convertible

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

The idea behind Nuveen Municipal Credit and Allianzgi Convertible 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 CEOs Directory module to screen CEOs from public companies around the world.