Correlation Between Ab Select and Kentucky Tax-free

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Can any of the company-specific risk be diversified away by investing in both Ab Select 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 Ab Select 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 Ab Select Longshort and Kentucky Tax Free Short To Medium, you can compare the effects of market volatilities on Ab Select 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 Ab Select with a short position of Kentucky Tax-free. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Select and Kentucky Tax-free.

Diversification Opportunities for Ab Select and Kentucky Tax-free

ASCLXKentuckyDiversified AwayASCLXKentuckyDiversified Away100%
0.48
  Correlation Coefficient

Very weak diversification

The 3 months correlation between ASCLX and Kentucky is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Ab Select Longshort and Kentucky Tax Free Short To Med in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kentucky Tax Free and Ab Select 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 Ab Select Longshort 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 Ab Select i.e., Ab Select and Kentucky Tax-free go up and down completely randomly.

Pair Corralation between Ab Select and Kentucky Tax-free

Assuming the 90 days horizon Ab Select Longshort is expected to under-perform the Kentucky Tax-free. In addition to that, Ab Select is 9.05 times more volatile than Kentucky Tax Free Short To Medium. It trades about -0.06 of its total potential returns per unit of risk. Kentucky Tax Free Short To Medium is currently generating about -0.11 per unit of volatility. If you would invest  516.00  in Kentucky Tax Free Short To Medium on October 7, 2024 and sell it today you would lose (4.00) from holding Kentucky Tax Free Short To Medium or give up 0.78% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Ab Select Longshort  vs.  Kentucky Tax Free Short To Med

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -6-4-2024
JavaScript chart by amCharts 3.21.15ASCLX KYSMX
       Timeline  
Ab Select Longshort 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Ab Select Longshort has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong essential indicators, Ab Select is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan12.81313.213.413.613.81414.2
Kentucky Tax Free 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Kentucky Tax Free Short To Medium has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong primary indicators, Kentucky Tax-free is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan5.125.1255.135.1355.145.1455.155.1555.16

Ab Select and Kentucky Tax-free Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-1.73-1.3-0.87-0.44-0.04330.30.731.161.592.02 51015202530
JavaScript chart by amCharts 3.21.15ASCLX KYSMX
       Returns  

Pair Trading with Ab Select and Kentucky Tax-free

The main advantage of trading using opposite Ab Select and Kentucky Tax-free positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Select 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.
The idea behind Ab Select Longshort and Kentucky Tax Free Short To Medium 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.
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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.

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