Correlation Between Global Technology and Aquila Tax-free

Can any of the company-specific risk be diversified away by investing in both Global Technology and Aquila 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 Global Technology and Aquila Tax-free into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Global Technology Portfolio and Aquila Tax Free Trust, you can compare the effects of market volatilities on Global Technology and Aquila 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 Global Technology with a short position of Aquila Tax-free. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Technology and Aquila Tax-free.

Diversification Opportunities for Global Technology and Aquila Tax-free

-0.25

Correlation Coefficient

Global Technology  Aquila Tax-free

Very good diversification

The 3 months correlation between Global and Aquila is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Global Technology Portfolio and Aquila Tax Free Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aquila Tax Free and Global Technology 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 Global Technology Portfolio are associated (or correlated) with Aquila 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 Aquila Tax Free has no effect on the direction of Global Technology i.e., Global Technology and Aquila Tax-free go up and down completely randomly.

Pair Corralation between Global Technology and Aquila Tax-free

Assuming the 90 days horizon Global Technology Portfolio is expected to generate 8.29 times more return on investment than Aquila Tax-free. However, Global Technology is 8.29 times more volatile than Aquila Tax Free Trust. It trades about 0.09 of its potential returns per unit of risk. Aquila Tax Free Trust is currently generating about 0.07 per unit of risk. If you would invest  1,485  in Global Technology Portfolio on September 10, 2024 and sell it today you would earn a total of  716.00  from holding Global Technology Portfolio or generate 48.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Global Technology Portfolio  vs.  Aquila Tax Free Trust

Global Technology

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global Technology Portfolio are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Global Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Aquila Tax Free

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Aquila Tax Free Trust are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Aquila Tax-free is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Global Technology and Aquila Tax-free

The main advantage of trading using opposite Global Technology and Aquila Tax-free positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Technology position performs unexpectedly, Aquila 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 Aquila Tax-free will offset losses from the drop in Aquila Tax-free's long position.

The idea behind Global Technology Portfolio and Aquila Tax Free Trust pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Transaction History module to view history of all your transactions and understand their impact on performance.