Correlation Between The Kansas and The Growth

Can any of the company-specific risk be diversified away by investing in both The Kansas and The Growth 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 The Kansas and The Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between The Kansas Tax Free and The Growth Fund, you can compare the effects of market volatilities on The Kansas and The Growth 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 The Kansas with a short position of The Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of The Kansas and The Growth.

Diversification Opportunities for The Kansas and The Growth

0.12

Correlation Coefficient

The Kansas  The Growth

Average diversification

The 3 months correlation between The and The is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding The Kansas Tax Free and The Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Fund and The Kansas 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 The Kansas Tax Free are associated (or correlated) with The Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Fund has no effect on the direction of The Kansas i.e., The Kansas and The Growth go up and down completely randomly.

Pair Corralation between The Kansas and The Growth

Assuming the 90 days horizon The Kansas Tax Free is expected to generate 0.13 times more return on investment than The Growth. However, The Kansas Tax Free is 7.89 times less risky than The Growth. It trades about -0.02 of its potential returns per unit of risk. The Growth Fund is currently generating about -0.04 per unit of risk. If you would invest  1,831  in The Kansas Tax Free on October 6, 2024 and sell it today you would lose (3.00) from holding The Kansas Tax Free or give up 0.16% of portfolio value over 90 days.

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

The Kansas Tax Free  vs.  The Growth Fund

Kansas Tax

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Kansas Tax Free has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, The Kansas is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Growth Fund

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Growth Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, The Growth is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with The Kansas and The Growth

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

The idea behind The Kansas Tax Free and The Growth Fund 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.