Correlation Between Nuveen Amt and Nuveen Municipal

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

Diversification Opportunities for Nuveen Amt and Nuveen Municipal

0.95

Correlation Coefficient

Nuveen Amt  Nuveen Municipal

Almost no diversification

The 3 months correlation between Nuveen and Nuveen is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Amt Free 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 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 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 i.e., Nuveen Amt and Nuveen Municipal go up and down completely randomly.

Pair Corralation between Nuveen Amt and Nuveen Municipal

Considering the 90-day investment horizon Nuveen Amt is expected to generate 7.98 times less return on investment than Nuveen Municipal. In addition to that, Nuveen Amt is 1.62 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  1,253  in Nuveen Municipal Credit on August 24, 2024 and sell it today you would earn a total of  9.00  from holding Nuveen Municipal Credit or generate 0.72% 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  vs.  Nuveen Municipal Credit

Nuveen Amt Free

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Amt Free are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. 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.

Nuveen Municipal Credit

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Municipal Credit are ranked lower than 2 (%) 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 and Nuveen Municipal

The main advantage of trading using opposite Nuveen Amt and Nuveen Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nuveen Amt 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 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.