Correlation Between Aquila Tax and Federated Pennsylvania
Can any of the company-specific risk be diversified away by investing in both Aquila Tax and Federated Pennsylvania 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 and Federated Pennsylvania 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 Federated Pennsylvania Municipal, you can compare the effects of market volatilities on Aquila Tax and Federated Pennsylvania 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 with a short position of Federated Pennsylvania. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aquila Tax and Federated Pennsylvania.
Diversification Opportunities for Aquila Tax and Federated Pennsylvania
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Aquila and FEDERATED is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Aquila Tax Free Fund and Federated Pennsylvania Municip in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Pennsylvania and Aquila Tax 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 Federated Pennsylvania. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Pennsylvania has no effect on the direction of Aquila Tax i.e., Aquila Tax and Federated Pennsylvania go up and down completely randomly.
Pair Corralation between Aquila Tax and Federated Pennsylvania
Assuming the 90 days horizon Aquila Tax is expected to generate 1.37 times less return on investment than Federated Pennsylvania. But when comparing it to its historical volatility, Aquila Tax Free Fund is 1.11 times less risky than Federated Pennsylvania. It trades about 0.14 of its potential returns per unit of risk. Federated Pennsylvania Municipal is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 1,004 in Federated Pennsylvania Municipal on September 3, 2024 and sell it today you would earn a total of 10.00 from holding Federated Pennsylvania Municipal or generate 1.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aquila Tax Free Fund vs. Federated Pennsylvania Municip
Performance |
| Timeline |
| Aquila Tax Free |
| Federated Pennsylvania |
Aquila Tax and Federated Pennsylvania Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aquila Tax and Federated Pennsylvania
The main advantage of trading using opposite Aquila Tax and Federated Pennsylvania positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aquila Tax position performs unexpectedly, Federated Pennsylvania 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 Federated Pennsylvania will offset losses from the drop in Federated Pennsylvania's long position.| Aquila Tax vs. Lind Capital Partners | Aquila Tax vs. Touchstone Premium Yield | Aquila Tax vs. Ab Bond Inflation | Aquila Tax vs. Gmo High Yield |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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