Correlation Between Nuveen Amt-free and Nuveen Municipal

Can any of the company-specific risk be diversified away by investing in both Nuveen Amt-free and Nuveen 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 Amt-free and Nuveen Municipal 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 Nuveen Municipal Credit, you can compare the effects of market volatilities on Nuveen Amt-free and Nuveen 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 Amt-free with a short position of Nuveen Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuveen Amt-free and Nuveen Municipal.

Diversification Opportunities for Nuveen Amt-free and Nuveen Municipal

0.82

Correlation Coefficient

Nuveen Amt-free  Nuveen Municipal

Very poor diversification

The 3 months correlation between Nuveen and Nuveen is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Amt Free Municipal and Nuveen Municipal Credit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Municipal Credit 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 Nuveen Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Municipal Credit has no effect on the direction of Nuveen Amt-free i.e., Nuveen Amt-free and Nuveen Municipal go up and down completely randomly.

Pair Corralation between Nuveen Amt-free and Nuveen Municipal

Considering the 90-day investment horizon Nuveen Amt Free Municipal is expected to generate 0.8 times more return on investment than Nuveen Municipal. However, Nuveen Amt Free Municipal is 1.25 times less risky than Nuveen Municipal. It trades about 0.21 of its potential returns per unit of risk. Nuveen Municipal Credit is currently generating about 0.06 per unit of risk. If you would invest  1,330  in Nuveen Amt Free Municipal on December 25, 2024 and sell it today you would earn a total of  75.00  from holding Nuveen Amt Free Municipal or generate 5.64% return on investment over 90 days.

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

Nuveen Amt Free Municipal  vs.  Nuveen Municipal Credit

Nuveen Amt Free

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Amt Free Municipal are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. 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.

Nuveen Municipal Credit

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Municipal Credit are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. Despite nearly stable basic indicators, Nuveen Municipal is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Nuveen Amt-free and Nuveen Municipal

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

The idea behind Nuveen Amt Free Municipal and Nuveen Municipal Credit 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.