Correlation Between Nuveen Pennsylvania and Blackrock Muniholdings

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

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

Diversification Opportunities for Nuveen Pennsylvania and Blackrock Muniholdings

0.91

Correlation Coefficient

Nuveen Pennsylvania  Blackrock Muniholdings

Almost no diversification

The 3 months correlation between Nuveen and Blackrock is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Pennsylvania Quality and Blackrock Muniholdings Ca in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Muniholdings and Nuveen Pennsylvania 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 Pennsylvania Quality are associated (or correlated) with Blackrock Muniholdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Muniholdings has no effect on the direction of Nuveen Pennsylvania i.e., Nuveen Pennsylvania and Blackrock Muniholdings go up and down completely randomly.

Pair Corralation between Nuveen Pennsylvania and Blackrock Muniholdings

Considering the 90-day investment horizon Nuveen Pennsylvania Quality is expected to under-perform the Blackrock Muniholdings. In addition to that, Nuveen Pennsylvania is 1.1 times more volatile than Blackrock Muniholdings Ca. It trades about -0.18 of its total potential returns per unit of risk. Blackrock Muniholdings Ca is currently generating about -0.05 per unit of volatility. If you would invest  1,140  in Blackrock Muniholdings Ca on September 15, 2024 and sell it today you would lose (21.00) from holding Blackrock Muniholdings Ca or give up 1.84% of portfolio value over 90 days.

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

Nuveen Pennsylvania Quality  vs.  Blackrock Muniholdings Ca

Nuveen Pennsylvania

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nuveen Pennsylvania Quality has generated negative risk-adjusted returns adding no value to fund investors. Even with latest fragile performance, the Fund's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the fund retail investors.

Blackrock Muniholdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blackrock Muniholdings Ca has generated negative risk-adjusted returns adding no value to fund investors. In spite of rather sound basic indicators, Blackrock Muniholdings is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Nuveen Pennsylvania and Blackrock Muniholdings

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

The idea behind Nuveen Pennsylvania Quality and Blackrock Muniholdings Ca 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.