Correlation Between Nuveen Municipal and Massachusetts Investors

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

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

Diversification Opportunities for Nuveen Municipal and Massachusetts Investors

-0.23

Correlation Coefficient

Nuveen Municipal  Massachusetts Investors

Very good diversification

The 3 months correlation between Nuveen and Massachusetts is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Nuveen Municipal High and Massachusetts Investors Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Massachusetts Investors and Nuveen Municipal 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 Municipal High are associated (or correlated) with Massachusetts Investors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Massachusetts Investors has no effect on the direction of Nuveen Municipal i.e., Nuveen Municipal and Massachusetts Investors go up and down completely randomly.

Pair Corralation between Nuveen Municipal and Massachusetts Investors

Assuming the 90 days horizon Nuveen Municipal High is expected to under-perform the Massachusetts Investors. But the mutual fund apears to be less risky and, when comparing its historical volatility, Nuveen Municipal High is 1.36 times less risky than Massachusetts Investors. The mutual fund trades about -0.11 of its potential returns per unit of risk. The Massachusetts Investors Trust is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  3,597  in Massachusetts Investors Trust on September 21, 2024 and sell it today you would earn a total of  42.00  from holding Massachusetts Investors Trust or generate 1.17% return on investment over 90 days.

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

Nuveen Municipal High  vs.  Massachusetts Investors Trust

Nuveen Municipal High

Risk-Adjusted Performance

0 of 100

Very Weak

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

Massachusetts Investors

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Massachusetts Investors Trust are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Massachusetts Investors 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 Municipal and Massachusetts Investors

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

The idea behind Nuveen Municipal High and Massachusetts Investors Trust 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 Commodity Directory module to find actively traded commodities issued by global exchanges.