Correlation Between Aquila Tax-free and American Century
Can any of the company-specific risk be diversified away by investing in both Aquila Tax-free and American Century 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 Century 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 Century Diversified, you can compare the effects of market volatilities on Aquila Tax-free and American Century 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 Century. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aquila Tax-free and American Century.
Diversification Opportunities for Aquila Tax-free and American Century
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aquila and American is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Aquila Tax Free Fund and American Century Diversified in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Century Div 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 Century. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Century Div has no effect on the direction of Aquila Tax-free i.e., Aquila Tax-free and American Century go up and down completely randomly.
Pair Corralation between Aquila Tax-free and American Century
Assuming the 90 days horizon Aquila Tax Free Fund is expected to generate 0.64 times more return on investment than American Century. However, Aquila Tax Free Fund is 1.56 times less risky than American Century. It trades about 0.18 of its potential returns per unit of risk. American Century Diversified is currently generating about 0.06 per unit of risk. If you would invest 964.00 in Aquila Tax Free Fund on September 1, 2024 and sell it today you would earn a total of 9.00 from holding Aquila Tax Free Fund or generate 0.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Aquila Tax Free Fund vs. American Century Diversified
Performance |
| Timeline |
| Aquila Tax Free |
| American Century Div |
Aquila Tax-free and American Century Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aquila Tax-free and American Century
The main advantage of trading using opposite Aquila Tax-free and American Century positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aquila Tax-free position performs unexpectedly, American Century 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 Century will offset losses from the drop in American Century's long position.| Aquila Tax-free vs. Aquila Three Peaks | Aquila Tax-free vs. Aquila Three Peaks | Aquila Tax-free vs. Aquila Three Peaks | Aquila Tax-free vs. Aquila Three Peaks |
| American Century vs. Ms Global Fixed | American Century vs. Ultra Short Fixed Income | American Century vs. Calamos Global Equity | American Century vs. Cutler Equity |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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