Correlation Between Aquila Tax-free and Nebraska Municipal
Can any of the company-specific risk be diversified away by investing in both Aquila Tax-free and Nebraska Municipal 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 Nebraska Municipal 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 Nebraska Municipal Fund, you can compare the effects of market volatilities on Aquila Tax-free and Nebraska Municipal 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 Nebraska Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aquila Tax-free and Nebraska Municipal.
Diversification Opportunities for Aquila Tax-free and Nebraska Municipal
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Aquila and NEBRASKA is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Aquila Tax Free Trust and Nebraska Municipal Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nebraska Municipal 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 Nebraska Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nebraska Municipal has no effect on the direction of Aquila Tax-free i.e., Aquila Tax-free and Nebraska Municipal go up and down completely randomly.
Pair Corralation between Aquila Tax-free and Nebraska Municipal
Assuming the 90 days horizon Aquila Tax Free Trust is expected to under-perform the Nebraska Municipal. But the mutual fund apears to be less risky and, when comparing its historical volatility, Aquila Tax Free Trust is 1.67 times less risky than Nebraska Municipal. The mutual fund trades about -0.07 of its potential returns per unit of risk. The Nebraska Municipal Fund is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 945.00 in Nebraska Municipal Fund on August 29, 2024 and sell it today you would lose (5.00) from holding Nebraska Municipal Fund or give up 0.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 97.67% |
| Values | Daily Returns |
Aquila Tax Free Trust vs. Nebraska Municipal Fund
Performance |
| Timeline |
| Aquila Tax Free |
| Nebraska Municipal |
Aquila Tax-free and Nebraska Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aquila Tax-free and Nebraska Municipal
The main advantage of trading using opposite Aquila Tax-free and Nebraska Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aquila Tax-free position performs unexpectedly, Nebraska Municipal 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 Nebraska Municipal will offset losses from the drop in Nebraska Municipal's long position.| Aquila Tax-free vs. Colorado Bondshares A | Aquila Tax-free vs. Virginia Bond Fund | Aquila Tax-free vs. HUMANA INC | Aquila Tax-free vs. Aquagold International |
| Nebraska Municipal vs. Colorado Bondshares A | Nebraska Municipal vs. Virginia Bond Fund | Nebraska Municipal vs. HUMANA INC | Nebraska Municipal vs. Aquagold International |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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