Correlation Between Aquila Tax-free and Siit High

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

Diversification Opportunities for Aquila Tax-free and Siit High

0.85

Correlation Coefficient

Aquila Tax-free  Siit High

Very poor diversification

The 3 months correlation between Aquila and Siit is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Aquila Tax Free Trust and Siit High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siit High Yield 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 Trust are associated (or correlated) with Siit High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siit High Yield has no effect on the direction of Aquila Tax-free i.e., Aquila Tax-free and Siit High go up and down completely randomly.

Pair Corralation between Aquila Tax-free and Siit High

Assuming the 90 days horizon Aquila Tax-free is expected to generate 3.35 times less return on investment than Siit High. But when comparing it to its historical volatility, Aquila Tax Free Trust is 1.47 times less risky than Siit High. It trades about 0.06 of its potential returns per unit of risk. Siit High Yield is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  696.00  in Siit High Yield on December 20, 2024 and sell it today you would earn a total of  14.00  from holding Siit High Yield or generate 2.01% return on investment over 90 days.

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

Aquila Tax Free Trust  vs.  Siit High Yield

Aquila Tax Free

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Aquila Tax Free Trust are ranked lower than 4 (%) 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.

Siit High Yield

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Siit High Yield are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Siit High 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-free and Siit High

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

The idea behind Aquila Tax Free Trust and Siit High Yield 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.