Correlation Between Nuveen Missouri and North American

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

Diversification Opportunities for Nuveen Missouri and North American

-0.02

Correlation Coefficient

Nuveen Missouri  North American

Good diversification

The 3 months correlation between Nuveen and North is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Missouri Quality and North American Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North American Financial 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 North American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North American Financial has no effect on the direction of Nuveen Missouri i.e., Nuveen Missouri and North American go up and down completely randomly.

Pair Corralation between Nuveen Missouri and North American

Considering the 90-day investment horizon Nuveen Missouri Quality is expected to generate 1.01 times more return on investment than North American. However, Nuveen Missouri is 1.01 times more volatile than North American Financial. It trades about 0.07 of its potential returns per unit of risk. North American Financial is currently generating about -0.06 per unit of risk. If you would invest  1,057  in Nuveen Missouri Quality on November 28, 2024 and sell it today you would earn a total of  80.00  from holding Nuveen Missouri Quality or generate 7.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	73.68%
Values	Daily Returns

Nuveen Missouri Quality  vs.  North American Financial

Nuveen Missouri Quality

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Missouri Quality are ranked lower than 5 (%) 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 March 2025.

North American Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days North American Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Nuveen Missouri and North American

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

The idea behind Nuveen Missouri Quality and North American Financial 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.