Correlation Between Nuveen Missouri and Western Asset

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

Diversification Opportunities for Nuveen Missouri and Western Asset

-0.14

Correlation Coefficient

Nuveen Missouri  Western Asset

Good diversification

The 3 months correlation between Nuveen and Western is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Missouri Quality and Western Asset Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Managed 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 Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Managed has no effect on the direction of Nuveen Missouri i.e., Nuveen Missouri and Western Asset go up and down completely randomly.

Pair Corralation between Nuveen Missouri and Western Asset

Considering the 90-day investment horizon Nuveen Missouri Quality is expected to under-perform the Western Asset. In addition to that, Nuveen Missouri is 3.37 times more volatile than Western Asset Managed. It trades about -0.06 of its total potential returns per unit of risk. Western Asset Managed is currently generating about 0.08 per unit of volatility. If you would invest  995.00  in Western Asset Managed on December 27, 2024 and sell it today you would earn a total of  28.00  from holding Western Asset Managed or generate 2.81% return on investment over 90 days.

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

Nuveen Missouri Quality  vs.  Western Asset Managed

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.

Western Asset Managed

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Western Asset Managed are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of comparatively stable primary indicators, Western Asset is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Nuveen Missouri and Western Asset

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

The idea behind Nuveen Missouri Quality and Western Asset Managed 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.