Correlation Between Aquila Tax-free and Us Government
Can any of the company-specific risk be diversified away by investing in both Aquila Tax-free and Us Government 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 Us Government into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aquila Tax Free Trust and Us Government Securities, you can compare the effects of market volatilities on Aquila Tax-free and Us Government 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 Us Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aquila Tax-free and Us Government.
Diversification Opportunities for Aquila Tax-free and Us Government
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aquila and CGTCX is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Aquila Tax Free Trust and Us Government Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Us Government Securities 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 Trust are associated (or correlated) with Us Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Us Government Securities has no effect on the direction of Aquila Tax-free i.e., Aquila Tax-free and Us Government go up and down completely randomly.
Pair Corralation between Aquila Tax-free and Us Government
Assuming the 90 days horizon Aquila Tax-free is expected to generate 1.61 times less return on investment than Us Government. But when comparing it to its historical volatility, Aquila Tax Free Trust is 2.45 times less risky than Us Government. It trades about 0.06 of its potential returns per unit of risk. Us Government Securities is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,144 in Us Government Securities on September 4, 2024 and sell it today you would earn a total of 39.00 from holding Us Government Securities or generate 3.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Aquila Tax Free Trust vs. Us Government Securities
Performance |
| Timeline |
| Aquila Tax Free |
| Us Government Securities |
Aquila Tax-free and Us Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aquila Tax-free and Us Government
The main advantage of trading using opposite Aquila Tax-free and Us Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aquila Tax-free position performs unexpectedly, Us Government 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 Us Government will offset losses from the drop in Us Government's long position.| 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 |
| Us Government vs. Income Fund Of | Us Government vs. American Mutual Fund | Us Government vs. American Mutual Fund | Us Government vs. American Funds Income |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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