Correlation Between American Independence and Kentucky Tax-free
Can any of the company-specific risk be diversified away by investing in both American Independence and Kentucky 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 American Independence and Kentucky Tax-free 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 Kentucky Tax Free Income, you can compare the effects of market volatilities on American Independence and Kentucky 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 American Independence with a short position of Kentucky Tax-free. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Independence and Kentucky Tax-free.
Diversification Opportunities for American Independence and Kentucky Tax-free
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Kentucky is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding American Independence Kansas and Kentucky Tax Free Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kentucky Tax Free 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 Kentucky 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 Kentucky Tax Free has no effect on the direction of American Independence i.e., American Independence and Kentucky Tax-free go up and down completely randomly.
Pair Corralation between American Independence and Kentucky Tax-free
Assuming the 90 days horizon American Independence is expected to generate 2.1 times less return on investment than Kentucky Tax-free. But when comparing it to its historical volatility, American Independence Kansas is 1.09 times less risky than Kentucky Tax-free. It trades about 0.02 of its potential returns per unit of risk. Kentucky Tax Free Income is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 693.00 in Kentucky Tax Free Income on August 25, 2024 and sell it today you would earn a total of 30.00 from holding Kentucky Tax Free Income or generate 4.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Independence Kansas vs. Kentucky Tax Free Income
Performance |
| Timeline |
| American Independence |
| Kentucky Tax Free |
American Independence and Kentucky Tax-free Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Independence and Kentucky Tax-free
The main advantage of trading using opposite American Independence and Kentucky Tax-free positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Independence position performs unexpectedly, Kentucky 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 Kentucky Tax-free will offset losses from the drop in Kentucky Tax-free's long position.| American Independence vs. Kentucky Tax Free Income | American Independence vs. Hawaiian Tax Free Trust | American Independence vs. HUMANA INC | American Independence 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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