Correlation Between Nuveen Missouri and Financial

Can any of the company-specific risk be diversified away by investing in both Nuveen Missouri and Financial 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 Financial 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 Financial 15 Split, you can compare the effects of market volatilities on Nuveen Missouri and Financial 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 Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen Missouri and Financial.

Diversification Opportunities for Nuveen Missouri and Financial

0.72

Correlation Coefficient

Nuveen Missouri  Financial

Poor diversification

The 3 months correlation between Nuveen and Financial is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Missouri Quality and Financial 15 Split in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Financial 15 Split 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 Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Financial 15 Split has no effect on the direction of Nuveen Missouri i.e., Nuveen Missouri and Financial go up and down completely randomly.

Pair Corralation between Nuveen Missouri and Financial

Considering the 90-day investment horizon Nuveen Missouri Quality is expected to under-perform the Financial. But the fund apears to be less risky and, when comparing its historical volatility, Nuveen Missouri Quality is 1.24 times less risky than Financial. The fund trades about -0.06 of its potential returns per unit of risk. The Financial 15 Split is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  642.00  in Financial 15 Split on December 30, 2024 and sell it today you would lose (35.00) from holding Financial 15 Split or give up 5.45% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.77%
Values	Daily Returns

Nuveen Missouri Quality  vs.  Financial 15 Split

Nuveen Missouri Quality

Risk-Adjusted Performance

Very Weak

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

Financial 15 Split

Risk-Adjusted Performance

Very Weak

Over the last 90 days Financial 15 Split has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Nuveen Missouri and Financial

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

The idea behind Nuveen Missouri Quality and Financial 15 Split 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..