Correlation Between Nuveen Municipal and Nuveen New

Can any of the company-specific risk be diversified away by investing in both Nuveen Municipal and Nuveen New 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 New into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nuveen Municipal High and Nuveen New York, you can compare the effects of market volatilities on Nuveen Municipal and Nuveen New 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 New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen Municipal and Nuveen New.

Diversification Opportunities for Nuveen Municipal and Nuveen New

0.87

Correlation Coefficient

Nuveen Municipal  Nuveen New

Very poor diversification

The 3 months correlation between Nuveen and Nuveen is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Municipal High and Nuveen New York in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen New York 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 High are associated (or correlated) with Nuveen New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen New York has no effect on the direction of Nuveen Municipal i.e., Nuveen Municipal and Nuveen New go up and down completely randomly.

Pair Corralation between Nuveen Municipal and Nuveen New

Considering the 90-day investment horizon Nuveen Municipal High is expected to generate 1.29 times more return on investment than Nuveen New. However, Nuveen Municipal is 1.29 times more volatile than Nuveen New York. It trades about 0.03 of its potential returns per unit of risk. Nuveen New York is currently generating about 0.04 per unit of risk. If you would invest  978.00  in Nuveen Municipal High on October 22, 2024 and sell it today you would earn a total of  118.00  from holding Nuveen Municipal High or generate 12.07% return on investment over 90 days.

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

Nuveen Municipal High  vs.  Nuveen New York

Nuveen Municipal High

Risk-Adjusted Performance

0 of 100

Very Weak

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

Nuveen New York

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nuveen New York has generated negative risk-adjusted returns adding no value to fund investors. In spite of very healthy basic indicators, Nuveen New is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Nuveen Municipal and Nuveen New

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

The idea behind Nuveen Municipal High and Nuveen New York 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.