Correlation Between Aquila Tax-free and American Funds
Can any of the company-specific risk be diversified away by investing in both Aquila Tax-free and American Funds 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 American Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aquila Tax Free Fund and American Funds Conservative, you can compare the effects of market volatilities on Aquila Tax-free and American Funds 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 American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aquila Tax-free and American Funds.
Diversification Opportunities for Aquila Tax-free and American Funds
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aquila and American is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Aquila Tax Free Fund and American Funds Conservative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Conse 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 Fund are associated (or correlated) with American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds Conse has no effect on the direction of Aquila Tax-free i.e., Aquila Tax-free and American Funds go up and down completely randomly.
Pair Corralation between Aquila Tax-free and American Funds
Assuming the 90 days horizon Aquila Tax-free is expected to generate 2.28 times less return on investment than American Funds. But when comparing it to its historical volatility, Aquila Tax Free Fund is 1.77 times less risky than American Funds. It trades about 0.16 of its potential returns per unit of risk. American Funds Conservative is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 1,342 in American Funds Conservative on November 27, 2024 and sell it today you would earn a total of 16.00 from holding American Funds Conservative or generate 1.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aquila Tax Free Fund vs. American Funds Conservative
Performance |
| Timeline |
| Aquila Tax Free |
| American Funds Conse |
Aquila Tax-free and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aquila Tax-free and American Funds
The main advantage of trading using opposite Aquila Tax-free and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aquila Tax-free position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' long position.| Aquila Tax-free vs. Virtus Artificial Intelligence | Aquila Tax-free vs. Science Technology Fund | Aquila Tax-free vs. Allianzgi Technology Fund | Aquila Tax-free vs. Technology Ultrasector Profund |
| American Funds vs. Doubleline Global Bond | American Funds vs. Alliancebernstein Global Highome | American Funds vs. Gmo Global Equity | American Funds vs. Dreyfusstandish Global Fixed |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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