Correlation Between Nuveen Core and DWS Municipal

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Can any of the company-specific risk be diversified away by investing in both Nuveen Core and DWS Municipal 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 Core and DWS Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nuveen Core Plus and DWS Municipal Income, you can compare the effects of market volatilities on Nuveen Core and DWS Municipal 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 Core with a short position of DWS Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen Core and DWS Municipal.

Diversification Opportunities for Nuveen Core and DWS Municipal

NuveenDWSDiversified AwayNuveenDWSDiversified Away100%
0.42
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Nuveen and DWS is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Core Plus and DWS Municipal Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DWS Municipal Income and Nuveen Core 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 Core Plus are associated (or correlated) with DWS Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DWS Municipal Income has no effect on the direction of Nuveen Core i.e., Nuveen Core and DWS Municipal go up and down completely randomly.

Pair Corralation between Nuveen Core and DWS Municipal

Given the investment horizon of 90 days Nuveen Core Plus is expected to under-perform the DWS Municipal. In addition to that, Nuveen Core is 1.05 times more volatile than DWS Municipal Income. It trades about -0.16 of its total potential returns per unit of risk. DWS Municipal Income is currently generating about -0.05 per unit of volatility. If you would invest  969.00  in DWS Municipal Income on September 23, 2024 and sell it today you would lose (22.00) from holding DWS Municipal Income or give up 2.27% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Nuveen Core Plus  vs.  DWS Municipal Income

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -3-2-10123
JavaScript chart by amCharts 3.21.15NPCT KTF
       Timeline  
Nuveen Core Plus 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Nuveen Core Plus has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec10.610.81111.211.411.6
DWS Municipal Income 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days DWS Municipal Income has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, DWS Municipal is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec9.49.59.69.79.89.910

Nuveen Core and DWS Municipal Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-1.1-0.81-0.52-0.23-0.03730.08670.350.640.931.22 0.20.40.60.81.01.2
JavaScript chart by amCharts 3.21.15NPCT KTF
       Returns  

Pair Trading with Nuveen Core and DWS Municipal

The main advantage of trading using opposite Nuveen Core and DWS Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nuveen Core position performs unexpectedly, DWS Municipal 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 DWS Municipal will offset losses from the drop in DWS Municipal's long position.
The idea behind Nuveen Core Plus and DWS Municipal Income 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.

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