Correlation Between Nuveen Strategic and Morgan Stanley

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

By analyzing existing cross correlation between Nuveen Strategic Municipal and Morgan Stanley Focus, you can compare the effects of market volatilities on Nuveen Strategic and Morgan Stanley 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 Strategic with a short position of Morgan Stanley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen Strategic and Morgan Stanley.

Diversification Opportunities for Nuveen Strategic and Morgan Stanley

0.0

Correlation Coefficient

Nuveen Strategic  Morgan Stanley

Pay attention - limited upside

The 3 months correlation between Nuveen and Morgan is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Strategic Municipal and Morgan Stanley Focus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley Focus and Nuveen Strategic 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 Strategic Municipal are associated (or correlated) with Morgan Stanley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Morgan Stanley Focus has no effect on the direction of Nuveen Strategic i.e., Nuveen Strategic and Morgan Stanley go up and down completely randomly.

Pair Corralation between Nuveen Strategic and Morgan Stanley

Assuming the 90 days horizon Nuveen Strategic Municipal is expected to under-perform the Morgan Stanley. But the mutual fund apears to be less risky and, when comparing its historical volatility, Nuveen Strategic Municipal is 2.03 times less risky than Morgan Stanley. The mutual fund trades about -0.02 of its potential returns per unit of risk. The Morgan Stanley Focus is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  971.00  in Morgan Stanley Focus on October 10, 2024 and sell it today you would earn a total of  37.00  from holding Morgan Stanley Focus or generate 3.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	54.1%
Values	Daily Returns

Nuveen Strategic Municipal  vs.  Morgan Stanley Focus

Nuveen Strategic Mun

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Nuveen Strategic Municipal has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Nuveen Strategic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Morgan Stanley Focus

Risk-Adjusted Performance

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Good

Over the last 90 days Morgan Stanley Focus has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly weak basic indicators, Morgan Stanley may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Nuveen Strategic and Morgan Stanley

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

The idea behind Nuveen Strategic Municipal and Morgan Stanley Focus 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.