Correlation Between Aquila Tax-free and Avantis Us

Can any of the company-specific risk be diversified away by investing in both Aquila Tax-free and Avantis Us 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 Avantis Us 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 Avantis Large Cap, you can compare the effects of market volatilities on Aquila Tax-free and Avantis Us 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 Avantis Us. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aquila Tax-free and Avantis Us.

Diversification Opportunities for Aquila Tax-free and Avantis Us

-0.02

Correlation Coefficient

Aquila Tax-free  Avantis Us

Good diversification

The 3 months correlation between Aquila and Avantis is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Aquila Tax Free Fund and Avantis Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avantis Large Cap 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 Avantis Us. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avantis Large Cap has no effect on the direction of Aquila Tax-free i.e., Aquila Tax-free and Avantis Us go up and down completely randomly.

Pair Corralation between Aquila Tax-free and Avantis Us

Assuming the 90 days horizon Aquila Tax-free is expected to generate 13.5 times less return on investment than Avantis Us. But when comparing it to its historical volatility, Aquila Tax Free Fund is 4.14 times less risky than Avantis Us. It trades about 0.07 of its potential returns per unit of risk. Avantis Large Cap is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  1,359  in Avantis Large Cap on September 5, 2024 and sell it today you would earn a total of  175.00  from holding Avantis Large Cap or generate 12.88% return on investment over 90 days.

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

Aquila Tax Free Fund  vs.  Avantis Large Cap

Aquila Tax Free

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aquila Tax Free Fund are ranked lower than 5 (%) 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.

Avantis Large Cap

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Avantis Large Cap are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Avantis Us may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Aquila Tax-free and Avantis Us

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

The idea behind Aquila Tax Free Fund and Avantis Large Cap 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.