Correlation Between Health Care and Aquila Tax-free
Can any of the company-specific risk be diversified away by investing in both Health Care 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 Health Care 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 Health Care Fund and Aquila Tax Free Trust, you can compare the effects of market volatilities on Health Care 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 Health Care with a short position of Aquila Tax-free. Check out your portfolio center. Please also check ongoing floating volatility patterns of Health Care and Aquila Tax-free.
Diversification Opportunities for Health Care and Aquila Tax-free
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Health and Aquila is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Health Care Fund and Aquila Tax Free Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aquila Tax Free and Health Care 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 Health Care Fund 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 Health Care i.e., Health Care and Aquila Tax-free go up and down completely randomly.
Pair Corralation between Health Care and Aquila Tax-free
Assuming the 90 days horizon Health Care is expected to generate 7.05 times less return on investment than Aquila Tax-free. In addition to that, Health Care is 3.69 times more volatile than Aquila Tax Free Trust. It trades about 0.0 of its total potential returns per unit of risk. Aquila Tax Free Trust is currently generating about 0.11 per unit of volatility. If you would invest 1,024 in Aquila Tax Free Trust on August 29, 2024 and sell it today you would earn a total of 6.00 from holding Aquila Tax Free Trust or generate 0.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Health Care Fund vs. Aquila Tax Free Trust
Performance |
| Timeline |
| Health Care Fund |
| Aquila Tax Free |
Health Care and Aquila Tax-free Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Health Care and Aquila Tax-free
The main advantage of trading using opposite Health Care and Aquila Tax-free positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Health Care 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.| Health Care vs. Fidelity Advisor Technology | Health Care vs. Fidelity Advisor Biotechnology | Health Care vs. Fidelity Advisor Financial | Health Care vs. Fidelity Advisor Utilities |
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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