Correlation Between Nuveen Strategic and Nuveen Minnesota

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

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

Diversification Opportunities for Nuveen Strategic and Nuveen Minnesota

0.73

Correlation Coefficient

Nuveen Strategic  Nuveen Minnesota

Poor diversification

The 3 months correlation between Nuveen and Nuveen is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Strategic Income and Nuveen Minnesota Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Minnesota Mun and Nuveen Strategic 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 Strategic Income are associated (or correlated) with Nuveen Minnesota. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Minnesota Mun has no effect on the direction of Nuveen Strategic i.e., Nuveen Strategic and Nuveen Minnesota go up and down completely randomly.

Pair Corralation between Nuveen Strategic and Nuveen Minnesota

Assuming the 90 days horizon Nuveen Strategic is expected to generate 4.38 times less return on investment than Nuveen Minnesota. But when comparing it to its historical volatility, Nuveen Strategic Income is 1.11 times less risky than Nuveen Minnesota. It trades about 0.02 of its potential returns per unit of risk. Nuveen Minnesota Municipal is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,078  in Nuveen Minnesota Municipal on August 31, 2024 and sell it today you would earn a total of  10.00  from holding Nuveen Minnesota Municipal or generate 0.93% return on investment over 90 days.

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

Nuveen Strategic Income  vs.  Nuveen Minnesota Municipal

Nuveen Strategic Income

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Strategic Income are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Nuveen Strategic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Nuveen Minnesota Mun

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Minnesota Municipal are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Nuveen Minnesota is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nuveen Strategic and Nuveen Minnesota

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

The idea behind Nuveen Strategic Income and Nuveen Minnesota Municipal 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.