Correlation Between Nuveen Amt-free and Blackrock Muniyield

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

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

Diversification Opportunities for Nuveen Amt-free and Blackrock Muniyield

0.92

Correlation Coefficient

Nuveen Amt-free  Blackrock Muniyield

Almost no diversification

The 3 months correlation between Nuveen and Blackrock is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Amt Free Municipal and Blackrock Muniyield Quality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Muniyield and Nuveen Amt-free 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 Amt Free Municipal are associated (or correlated) with Blackrock Muniyield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Muniyield has no effect on the direction of Nuveen Amt-free i.e., Nuveen Amt-free and Blackrock Muniyield go up and down completely randomly.

Pair Corralation between Nuveen Amt-free and Blackrock Muniyield

Considering the 90-day investment horizon Nuveen Amt-free is expected to generate 1.1 times less return on investment than Blackrock Muniyield. But when comparing it to its historical volatility, Nuveen Amt Free Municipal is 1.09 times less risky than Blackrock Muniyield. It trades about 0.02 of its potential returns per unit of risk. Blackrock Muniyield Quality is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,045  in Blackrock Muniyield Quality on October 15, 2024 and sell it today you would earn a total of  45.00  from holding Blackrock Muniyield Quality or generate 4.31% return on investment over 90 days.

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

Nuveen Amt Free Municipal  vs.  Blackrock Muniyield Quality

Nuveen Amt Free

Risk-Adjusted Performance

0 of 100

Very Weak

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

Blackrock Muniyield

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blackrock Muniyield Quality has generated negative risk-adjusted returns adding no value to fund investors. Despite latest unsteady performance, the Fund's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the fund traders.

Pair Trading with Nuveen Amt-free and Blackrock Muniyield

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

The idea behind Nuveen Amt Free Municipal and Blackrock Muniyield Quality 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.

Check out your portfolio center.

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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.