Correlation Between Nuveen Minnesota and Transamerica Asset

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

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

Diversification Opportunities for Nuveen Minnesota and Transamerica Asset

0.67

Correlation Coefficient

Nuveen Minnesota  Transamerica Asset

Poor diversification

The 3 months correlation between Nuveen and Transamerica is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Minnesota Municipal and Transamerica Asset Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Asset and Nuveen Minnesota 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 Minnesota Municipal are associated (or correlated) with Transamerica Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Asset has no effect on the direction of Nuveen Minnesota i.e., Nuveen Minnesota and Transamerica Asset go up and down completely randomly.

Pair Corralation between Nuveen Minnesota and Transamerica Asset

Assuming the 90 days horizon Nuveen Minnesota Municipal is expected to under-perform the Transamerica Asset. But the mutual fund apears to be less risky and, when comparing its historical volatility, Nuveen Minnesota Municipal is 2.47 times less risky than Transamerica Asset. The mutual fund trades about -0.18 of its potential returns per unit of risk. The Transamerica Asset Allocation is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  1,413  in Transamerica Asset Allocation on September 27, 2024 and sell it today you would lose (11.00) from holding Transamerica Asset Allocation or give up 0.78% of portfolio value over 90 days.

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

Nuveen Minnesota Municipal  vs.  Transamerica Asset Allocation

Nuveen Minnesota Mun

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nuveen Minnesota Municipal has generated negative risk-adjusted returns adding no value to fund investors. 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.

Transamerica Asset

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Transamerica Asset Allocation has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong essential indicators, Transamerica Asset 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 Minnesota and Transamerica Asset

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

The idea behind Nuveen Minnesota Municipal and Transamerica Asset Allocation 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.