Correlation Between Nuveen Municipal and Blackrock Muniassets

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

Diversification Opportunities for Nuveen Municipal and Blackrock Muniassets

0.75

Correlation Coefficient

Nuveen Municipal  Blackrock Muniassets

Poor diversification

The 3 months correlation between Nuveen and Blackrock is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Municipal Credit and Blackrock Muniassets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Muniassets 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 Blackrock Muniassets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Muniassets has no effect on the direction of Nuveen Municipal i.e., Nuveen Municipal and Blackrock Muniassets go up and down completely randomly.

Pair Corralation between Nuveen Municipal and Blackrock Muniassets

Given the investment horizon of 90 days Nuveen Municipal Credit is expected to under-perform the Blackrock Muniassets. In addition to that, Nuveen Municipal is 1.57 times more volatile than Blackrock Muniassets. It trades about -0.15 of its total potential returns per unit of risk. Blackrock Muniassets is currently generating about -0.02 per unit of volatility. If you would invest  1,207  in Blackrock Muniassets on September 12, 2024 and sell it today you would lose (8.00) from holding Blackrock Muniassets or give up 0.66% of portfolio value over 90 days.

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

Nuveen Municipal Credit  vs.  Blackrock Muniassets

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.

Blackrock Muniassets

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Nuveen Municipal and Blackrock Muniassets

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

The idea behind Nuveen Municipal Credit and Blackrock Muniassets 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.