Correlation Between American Independence and The Kansas
Can any of the company-specific risk be diversified away by investing in both American Independence and The Kansas 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 American Independence and The Kansas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Independence Kansas and The Kansas Tax Free, you can compare the effects of market volatilities on American Independence and The Kansas 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 American Independence with a short position of The Kansas. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Independence and The Kansas.
Diversification Opportunities for American Independence and The Kansas
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between American and The is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding American Independence Kansas and The Kansas Tax Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kansas Tax and American Independence 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 American Independence Kansas are associated (or correlated) with The Kansas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kansas Tax has no effect on the direction of American Independence i.e., American Independence and The Kansas go up and down completely randomly.
Pair Corralation between American Independence and The Kansas
Assuming the 90 days horizon American Independence Kansas is expected to generate 0.95 times more return on investment than The Kansas. However, American Independence Kansas is 1.05 times less risky than The Kansas. It trades about 0.36 of its potential returns per unit of risk. The Kansas Tax Free is currently generating about 0.29 per unit of risk. If you would invest 1,007 in American Independence Kansas on November 29, 2024 and sell it today you would earn a total of 11.00 from holding American Independence Kansas or generate 1.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
American Independence Kansas vs. The Kansas Tax Free
Performance |
| Timeline |
| American Independence |
| Kansas Tax |
American Independence and The Kansas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Independence and The Kansas
The main advantage of trading using opposite American Independence and The Kansas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Independence position performs unexpectedly, The Kansas 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 The Kansas will offset losses from the drop in The Kansas' long position.| American Independence vs. Touchstone Large Cap | American Independence vs. Old Westbury Large | American Independence vs. Fisher Large Cap | American Independence vs. Fidelity Large Cap |
| The Kansas vs. The National Tax Free | The Kansas vs. The Missouri Tax Free | The Kansas vs. American Independence Kansas | The Kansas vs. Kansas Municipal Fund |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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