Correlation Between Nuveen Massachusetts and Vanguard Total

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

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

Diversification Opportunities for Nuveen Massachusetts and Vanguard Total

0.35

Correlation Coefficient

Nuveen Massachusetts  Vanguard Total

Weak diversification

The 3 months correlation between Nuveen and Vanguard is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Massachusetts Municipal and Vanguard Total International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Total Inter and Nuveen Massachusetts 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 Massachusetts Municipal are associated (or correlated) with Vanguard Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Total Inter has no effect on the direction of Nuveen Massachusetts i.e., Nuveen Massachusetts and Vanguard Total go up and down completely randomly.

Pair Corralation between Nuveen Massachusetts and Vanguard Total

Assuming the 90 days horizon Nuveen Massachusetts Municipal is expected to generate 0.29 times more return on investment than Vanguard Total. However, Nuveen Massachusetts Municipal is 3.46 times less risky than Vanguard Total. It trades about 0.07 of its potential returns per unit of risk. Vanguard Total International is currently generating about -0.01 per unit of risk. If you would invest  929.00  in Nuveen Massachusetts Municipal on September 2, 2024 and sell it today you would earn a total of  10.00  from holding Nuveen Massachusetts Municipal or generate 1.08% return on investment over 90 days.

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

Nuveen Massachusetts Municipal  vs.  Vanguard Total International

Nuveen Massachusetts

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Massachusetts 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 Massachusetts is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Vanguard Total Inter

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard Total International has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Vanguard Total 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 Massachusetts and Vanguard Total

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

The idea behind Nuveen Massachusetts Municipal and Vanguard Total International 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.