Correlation Between Aquila Tax-free and Franklin Colorado
Can any of the company-specific risk be diversified away by investing in both Aquila Tax-free and Franklin Colorado 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 Aquila Tax-free and Franklin Colorado into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aquila Tax Free Fund and Franklin Orado Tax Free, you can compare the effects of market volatilities on Aquila Tax-free and Franklin Colorado 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 Aquila Tax-free with a short position of Franklin Colorado. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aquila Tax-free and Franklin Colorado.
Diversification Opportunities for Aquila Tax-free and Franklin Colorado
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Aquila and Franklin is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Aquila Tax Free Fund and Franklin Orado Tax Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Orado Tax and Aquila Tax-free 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 Aquila Tax Free Fund are associated (or correlated) with Franklin Colorado. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Orado Tax has no effect on the direction of Aquila Tax-free i.e., Aquila Tax-free and Franklin Colorado go up and down completely randomly.
Pair Corralation between Aquila Tax-free and Franklin Colorado
Assuming the 90 days horizon Aquila Tax-free is expected to generate 2.22 times less return on investment than Franklin Colorado. But when comparing it to its historical volatility, Aquila Tax Free Fund is 1.34 times less risky than Franklin Colorado. It trades about 0.07 of its potential returns per unit of risk. Franklin Orado Tax Free is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,003 in Franklin Orado Tax Free on August 26, 2024 and sell it today you would earn a total of 57.00 from holding Franklin Orado Tax Free or generate 5.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aquila Tax Free Fund vs. Franklin Orado Tax Free
Performance |
| Timeline |
| Aquila Tax Free |
| Franklin Orado Tax |
Aquila Tax-free and Franklin Colorado Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aquila Tax-free and Franklin Colorado
The main advantage of trading using opposite Aquila Tax-free and Franklin Colorado positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aquila Tax-free position performs unexpectedly, Franklin Colorado 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 Franklin Colorado will offset losses from the drop in Franklin Colorado's long position.| Aquila Tax-free vs. Ab Value Fund | Aquila Tax-free vs. Acm Dynamic Opportunity | Aquila Tax-free vs. Qs Large Cap | Aquila Tax-free vs. Fa 529 Aggressive |
| Franklin Colorado vs. Franklin Mutual Beacon | Franklin Colorado vs. Templeton Developing Markets | Franklin Colorado vs. Franklin Mutual Global | Franklin Colorado vs. Franklin Mutual Global |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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