Correlation Between Kentucky Tax-free and Aquila Tax-free
Can any of the company-specific risk be diversified away by investing in both Kentucky Tax-free 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 Kentucky Tax-free 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 Kentucky Tax Free Income and Aquila Tax Free Fund, you can compare the effects of market volatilities on Kentucky Tax-free 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 Kentucky Tax-free with a short position of Aquila Tax-free. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kentucky Tax-free and Aquila Tax-free.
Diversification Opportunities for Kentucky Tax-free and Aquila Tax-free
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kentucky and Aquila is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Kentucky Tax Free Income 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 Kentucky 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 Kentucky Tax Free Income 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 Kentucky Tax-free i.e., Kentucky Tax-free and Aquila Tax-free go up and down completely randomly.
Pair Corralation between Kentucky Tax-free and Aquila Tax-free
Assuming the 90 days horizon Kentucky Tax Free Income is expected to generate 1.41 times more return on investment than Aquila Tax-free. However, Kentucky Tax-free is 1.41 times more volatile than Aquila Tax Free Fund. It trades about 0.06 of its potential returns per unit of risk. Aquila Tax Free Fund is currently generating about 0.06 per unit of risk. If you would invest 682.00 in Kentucky Tax Free Income on August 29, 2024 and sell it today you would earn a total of 43.00 from holding Kentucky Tax Free Income or generate 6.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Kentucky Tax Free Income vs. Aquila Tax Free Fund
Performance |
| Timeline |
| Kentucky Tax Free |
| Aquila Tax Free |
Kentucky Tax-free and Aquila Tax-free Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kentucky Tax-free and Aquila Tax-free
The main advantage of trading using opposite Kentucky Tax-free and Aquila Tax-free positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kentucky Tax-free 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.| Kentucky Tax-free vs. Icon Natural Resources | Kentucky Tax-free vs. Oil Gas Ultrasector | Kentucky Tax-free vs. Fidelity Advisor Energy | Kentucky Tax-free vs. Gmo Resources |
| Aquila Tax-free vs. Bbh Intermediate Municipal | Aquila Tax-free vs. T Rowe Price | Aquila Tax-free vs. Oklahoma Municipal Fund | Aquila Tax-free vs. Ishares Municipal Bond |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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