Correlation Between Nuveen Municipal and BlackRock Virginia

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

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

Diversification Opportunities for Nuveen Municipal and BlackRock Virginia

-0.14

Correlation Coefficient

Nuveen Municipal  BlackRock Virginia

Good diversification

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

Pair Corralation between Nuveen Municipal and BlackRock Virginia

Considering the 90-day investment horizon Nuveen Municipal Value is expected to generate 0.65 times more return on investment than BlackRock Virginia. However, Nuveen Municipal Value is 1.53 times less risky than BlackRock Virginia. It trades about 0.14 of its potential returns per unit of risk. BlackRock Virginia MBT is currently generating about -0.08 per unit of risk. If you would invest  843.00  in Nuveen Municipal Value on December 21, 2024 and sell it today you would earn a total of  30.00  from holding Nuveen Municipal Value or generate 3.56% return on investment over 90 days.

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

Nuveen Municipal Value  vs.  BlackRock Virginia MBT

Nuveen Municipal Value

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Municipal Value are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly stable basic indicators, Nuveen Municipal is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

BlackRock Virginia MBT

Risk-Adjusted Performance

Very Weak

Over the last 90 days BlackRock Virginia MBT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical indicators, BlackRock Virginia is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Nuveen Municipal and BlackRock Virginia

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

The idea behind Nuveen Municipal Value and BlackRock Virginia MBT 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.