Correlation Between Acclivity Small and Aquila Tax-free

Can any of the company-specific risk be diversified away by investing in both Acclivity Small 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 Acclivity Small 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 Acclivity Small Cap and Aquila Tax Free Trust, you can compare the effects of market volatilities on Acclivity Small 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 Acclivity Small with a short position of Aquila Tax-free. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acclivity Small and Aquila Tax-free.

Diversification Opportunities for Acclivity Small and Aquila Tax-free

-0.29

Correlation Coefficient

Acclivity Small  Aquila Tax-free

Very good diversification

The 3 months correlation between Acclivity and Aquila is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Acclivity Small Cap 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 Acclivity Small 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 Acclivity Small Cap 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 Acclivity Small i.e., Acclivity Small and Aquila Tax-free go up and down completely randomly.

Pair Corralation between Acclivity Small and Aquila Tax-free

Assuming the 90 days horizon Acclivity Small Cap is expected to generate 6.86 times more return on investment than Aquila Tax-free. However, Acclivity Small is 6.86 times more volatile than Aquila Tax Free Trust. It trades about 0.14 of its potential returns per unit of risk. Aquila Tax Free Trust is currently generating about 0.03 per unit of risk. If you would invest  1,891  in Acclivity Small Cap on September 5, 2024 and sell it today you would earn a total of  225.00  from holding Acclivity Small Cap or generate 11.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Acclivity Small Cap  vs.  Aquila Tax Free Trust

Acclivity Small Cap

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Acclivity Small Cap are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Acclivity Small may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Aquila Tax Free

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aquila Tax Free Trust are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental 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 Acclivity Small and Aquila Tax-free

The main advantage of trading using opposite Acclivity Small and Aquila Tax-free positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acclivity Small 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 Acclivity Small Cap 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.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.