Correlation Between Nuveen Missouri and China Fund

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

By analyzing existing cross correlation between Nuveen Missouri Quality and China Fund, you can compare the effects of market volatilities on Nuveen Missouri and China 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 Missouri with a short position of China Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen Missouri and China Fund.

Diversification Opportunities for Nuveen Missouri and China Fund

-0.43

Correlation Coefficient

Nuveen Missouri  China Fund

Very good diversification

The 3 months correlation between Nuveen and China is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Missouri Quality and China Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Fund and Nuveen Missouri 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 Missouri Quality are associated (or correlated) with China Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Fund has no effect on the direction of Nuveen Missouri i.e., Nuveen Missouri and China Fund go up and down completely randomly.

Pair Corralation between Nuveen Missouri and China Fund

Considering the 90-day investment horizon Nuveen Missouri Quality is expected to generate 0.93 times more return on investment than China Fund. However, Nuveen Missouri Quality is 1.07 times less risky than China Fund. It trades about 0.06 of its potential returns per unit of risk. China Fund is currently generating about -0.05 per unit of risk. If you would invest  1,070  in Nuveen Missouri Quality on October 21, 2024 and sell it today you would earn a total of  58.00  from holding Nuveen Missouri Quality or generate 5.42% return on investment over 90 days.

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

Nuveen Missouri Quality  vs.  China Fund

Nuveen Missouri Quality

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Missouri Quality are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of very weak basic indicators, Nuveen Missouri may actually be approaching a critical reversion point that can send shares even higher in February 2025.

China Fund

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Nuveen Missouri and China Fund

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

The idea behind Nuveen Missouri Quality and China 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.