Correlation Between Hawaiian Tax-free and Aquila Tax
Can any of the company-specific risk be diversified away by investing in both Hawaiian Tax-free and Aquila Tax 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 Hawaiian Tax-free and Aquila Tax into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hawaiian Tax Free Trust and Aquila Tax Free Fund, you can compare the effects of market volatilities on Hawaiian Tax-free and Aquila Tax 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 Hawaiian Tax-free with a short position of Aquila Tax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hawaiian Tax-free and Aquila Tax.
Diversification Opportunities for Hawaiian Tax-free and Aquila Tax
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Hawaiian and Aquila is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Hawaiian Tax Free Trust 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 Hawaiian 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 Hawaiian Tax Free Trust are associated (or correlated) with Aquila Tax. 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 Hawaiian Tax-free i.e., Hawaiian Tax-free and Aquila Tax go up and down completely randomly.
Pair Corralation between Hawaiian Tax-free and Aquila Tax
Assuming the 90 days horizon Hawaiian Tax Free Trust is expected to generate 1.17 times more return on investment than Aquila Tax. However, Hawaiian Tax-free is 1.17 times more volatile than Aquila Tax Free Fund. It trades about 0.05 of its potential returns per unit of risk. Aquila Tax Free Fund is currently generating about 0.04 per unit of risk. If you would invest 1,015 in Hawaiian Tax Free Trust on August 29, 2024 and sell it today you would earn a total of 44.00 from holding Hawaiian Tax Free Trust or generate 4.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hawaiian Tax Free Trust vs. Aquila Tax Free Fund
Performance |
| Timeline |
| Hawaiian Tax Free |
| Aquila Tax Free |
Hawaiian Tax-free and Aquila Tax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hawaiian Tax-free and Aquila Tax
The main advantage of trading using opposite Hawaiian Tax-free and Aquila Tax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hawaiian Tax-free position performs unexpectedly, Aquila Tax 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 will offset losses from the drop in Aquila Tax's long position.| Hawaiian Tax-free vs. Aquila Three Peaks | Hawaiian Tax-free vs. Aquila Three Peaks | Hawaiian Tax-free vs. Aquila Three Peaks | Hawaiian Tax-free vs. Aquila Three Peaks |
| Aquila Tax vs. Aquila Three Peaks | Aquila Tax vs. Aquila Three Peaks | Aquila Tax vs. Aquila Three Peaks | Aquila Tax 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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