Correlation Between Pimco New and Nuveen Municipal

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

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

Diversification Opportunities for Pimco New and Nuveen Municipal

0.22

Correlation Coefficient

Pimco New  Nuveen Municipal

Modest diversification

The 3 months correlation between Pimco and Nuveen is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Pimco New York 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 Pimco New 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 New York 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 Pimco New i.e., Pimco New and Nuveen Municipal go up and down completely randomly.

Pair Corralation between Pimco New and Nuveen Municipal

Considering the 90-day investment horizon Pimco New York is expected to under-perform the Nuveen Municipal. In addition to that, Pimco New is 1.21 times more volatile than Nuveen Municipal Credit. It trades about 0.0 of its total potential returns per unit of risk. Nuveen Municipal Credit is currently generating about 0.06 per unit of volatility. If you would invest  1,068  in Nuveen Municipal Credit on September 14, 2024 and sell it today you would earn a total of  218.00  from holding Nuveen Municipal Credit or generate 20.41% return on investment over 90 days.

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

Pimco New York  vs.  Nuveen Municipal Credit

Pimco New York

Risk-Adjusted Performance

0 of 100

Very Weak

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

Nuveen Municipal Credit

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Pimco New and Nuveen Municipal

The main advantage of trading using opposite Pimco New and Nuveen Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco New 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 Pimco New York 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.