Correlation Between Pimco Municipal and Nuveen Amt

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

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

Diversification Opportunities for Pimco Municipal and Nuveen Amt

0.66

Correlation Coefficient

Pimco Municipal  Nuveen Amt

Poor diversification

The 3 months correlation between Pimco and Nuveen is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Municipal Income and Nuveen Amt Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Amt Free and Pimco 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 Pimco Municipal Income are associated (or correlated) with Nuveen Amt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Amt Free has no effect on the direction of Pimco Municipal i.e., Pimco Municipal and Nuveen Amt go up and down completely randomly.

Pair Corralation between Pimco Municipal and Nuveen Amt

Considering the 90-day investment horizon Pimco Municipal Income is expected to under-perform the Nuveen Amt. In addition to that, Pimco Municipal is 1.15 times more volatile than Nuveen Amt Free. It trades about -0.06 of its total potential returns per unit of risk. Nuveen Amt Free is currently generating about 0.01 per unit of volatility. If you would invest  1,314  in Nuveen Amt Free on September 13, 2024 and sell it today you would earn a total of  5.00  from holding Nuveen Amt Free or generate 0.38% return on investment over 90 days.

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

Pimco Municipal Income  vs.  Nuveen Amt Free

Pimco Municipal Income

Risk-Adjusted Performance

0 of 100

Very Weak

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

Nuveen Amt Free

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nuveen Amt Free has generated negative risk-adjusted returns adding no value to fund investors. Despite nearly stable basic indicators, Nuveen Amt is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Pimco Municipal and Nuveen Amt

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

The idea behind Pimco Municipal Income and Nuveen Amt Free 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..