Correlation Between Munivest Fund and Nuveen California

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

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

Diversification Opportunities for Munivest Fund and Nuveen California

0.93

Correlation Coefficient

Munivest Fund  Nuveen California

Almost no diversification

The 3 months correlation between Munivest and Nuveen is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Munivest Fund and Nuveen California Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen California Select and Munivest Fund 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 Munivest Fund are associated (or correlated) with Nuveen California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen California Select has no effect on the direction of Munivest Fund i.e., Munivest Fund and Nuveen California go up and down completely randomly.

Pair Corralation between Munivest Fund and Nuveen California

Considering the 90-day investment horizon Munivest Fund is expected to generate 1.31 times less return on investment than Nuveen California. But when comparing it to its historical volatility, Munivest Fund is 1.1 times less risky than Nuveen California. It trades about 0.29 of its potential returns per unit of risk. Nuveen California Select is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest  1,363  in Nuveen California Select on July 3, 2024 and sell it today you would earn a total of  51.00  from holding Nuveen California Select or generate 3.74% return on investment over 90 days.

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

Munivest Fund  vs.  Nuveen California Select

Munivest Fund

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Munivest Fund are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. Despite nearly stable basic indicators, Munivest Fund is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Nuveen California Select

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen California Select are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Nuveen California may actually be approaching a critical reversion point that can send shares even higher in November 2024.

Pair Trading with Munivest Fund and Nuveen California

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

The idea behind Munivest Fund and Nuveen California Select 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.

Check out your portfolio center.

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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.