Correlation Between Dow Jones and Aquila Tax-free
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Aquila Tax-free 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 Dow Jones and Aquila Tax-free into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Aquila Tax Free Fund, you can compare the effects of market volatilities on Dow Jones and Aquila Tax-free 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 Dow Jones with a short position of Aquila Tax-free. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Aquila Tax-free.
Diversification Opportunities for Dow Jones and Aquila Tax-free
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dow and Aquila is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Aquila Tax Free Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aquila Tax Free and Dow Jones 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 Dow Jones Industrial are associated (or correlated) with Aquila Tax-free. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aquila Tax Free has no effect on the direction of Dow Jones i.e., Dow Jones and Aquila Tax-free go up and down completely randomly.
Pair Corralation between Dow Jones and Aquila Tax-free
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 4.08 times more return on investment than Aquila Tax-free. However, Dow Jones is 4.08 times more volatile than Aquila Tax Free Fund. It trades about 0.37 of its potential returns per unit of risk. Aquila Tax Free Fund is currently generating about 0.18 per unit of risk. If you would invest 4,176,346 in Dow Jones Industrial on September 1, 2024 and sell it today you would earn a total of 314,719 from holding Dow Jones Industrial or generate 7.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dow Jones Industrial vs. Aquila Tax Free Fund
Performance |
| Timeline |
Dow Jones and Aquila Tax-free Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Aquila Tax Free Fund
Pair trading matchups for Aquila Tax-free
Pair Trading with Dow Jones and Aquila Tax-free
The main advantage of trading using opposite Dow Jones and Aquila Tax-free positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Aquila Tax-free 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 Aquila Tax-free will offset losses from the drop in Aquila Tax-free's long position.| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
| Aquila Tax-free vs. Aquila Three Peaks | Aquila Tax-free vs. Aquila Three Peaks | Aquila Tax-free vs. Aquila Three Peaks | Aquila Tax-free vs. Aquila Three Peaks |
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 CEOs Directory module to screen CEOs from public companies around the world.
Other Complementary Tools
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities |