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
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Aquila and Nebraska is 0.89. 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 generate 0.72 times more return on investment than Nebraska Municipal. However, Aquila Tax Free Trust is 1.39 times less risky than Nebraska Municipal. It trades about 0.04 of its potential returns per unit of risk. Nebraska Municipal Fund is currently generating about 0.01 per unit of risk. If you would invest 986.00 in Aquila Tax Free Trust on November 2, 2024 and sell it today you would earn a total of 36.00 from holding Aquila Tax Free Trust or generate 3.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| 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. Franklin Adjustable Government | Aquila Tax-free vs. Us Government Securities | Aquila Tax-free vs. Dws Government Money | Aquila Tax-free vs. Federated Government Income |
| Nebraska Municipal vs. Commonwealth Global Fund | Nebraska Municipal vs. Barings Global Floating | Nebraska Municipal vs. Rbb Fund | Nebraska Municipal vs. Qs Global Equity |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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