Correlation Between Aquila Tax and Nebraska Municipal

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

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

Diversification Opportunities for Aquila Tax and Nebraska Municipal

0.0

Correlation Coefficient

Aquila Tax  Nebraska Municipal

Pay attention - limited upside

The 3 months correlation between Aquila and Nebraska is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Aquila Tax Free Trust and Nebraska Municipal Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nebraska Municipal and Aquila Tax 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 Trust are associated (or correlated) with Nebraska Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nebraska Municipal has no effect on the direction of Aquila Tax i.e., Aquila Tax and Nebraska Municipal go up and down completely randomly.

Pair Corralation between Aquila Tax and Nebraska Municipal

If you would invest (100.00) in Aquila Tax Free Trust on December 30, 2024 and sell it today you would earn a total of  100.00  from holding Aquila Tax Free Trust or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Aquila Tax Free Trust  vs.  Nebraska Municipal Fund

Aquila Tax Free

Risk-Adjusted Performance

Very Weak

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

Nebraska Municipal

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Aquila Tax and Nebraska Municipal

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

The idea behind Aquila Tax Free Trust and Nebraska Municipal 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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.