Correlation Between Municipal Bond and Nuveen Limited

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

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

Diversification Opportunities for Municipal Bond and Nuveen Limited

0.84

Correlation Coefficient

Municipal Bond  Nuveen Limited

Very poor diversification

The 3 months correlation between Municipal and Nuveen is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Municipal Bond Fund and Nuveen Limited Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Limited Term and Municipal Bond 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 Municipal Bond Fund are associated (or correlated) with Nuveen Limited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Limited Term has no effect on the direction of Municipal Bond i.e., Municipal Bond and Nuveen Limited go up and down completely randomly.

Pair Corralation between Municipal Bond and Nuveen Limited

Assuming the 90 days horizon Municipal Bond Fund is expected to generate 1.39 times more return on investment than Nuveen Limited. However, Municipal Bond is 1.39 times more volatile than Nuveen Limited Term. It trades about 0.03 of its potential returns per unit of risk. Nuveen Limited Term is currently generating about -0.05 per unit of risk. If you would invest  983.00  in Municipal Bond Fund on September 13, 2024 and sell it today you would earn a total of  4.00  from holding Municipal Bond Fund or generate 0.41% return on investment over 90 days.

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

Municipal Bond Fund  vs.  Nuveen Limited Term

Municipal Bond

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Municipal Bond Fund are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Municipal Bond is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Nuveen Limited Term

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Municipal Bond and Nuveen Limited

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

The idea behind Municipal Bond Fund and Nuveen Limited Term 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.