Correlation Between Aquila Tax-free and Nationwide Highmark

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

Diversification Opportunities for Aquila Tax-free and Nationwide Highmark

0.76

Correlation Coefficient

Aquila Tax-free  Nationwide Highmark

Poor diversification

The 3 months correlation between Aquila and NATIONWIDE is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Aquila Tax Free Fund and Nationwide Highmark Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Highmark Short 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 Nationwide Highmark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Highmark Short has no effect on the direction of Aquila Tax-free i.e., Aquila Tax-free and Nationwide Highmark go up and down completely randomly.

Pair Corralation between Aquila Tax-free and Nationwide Highmark

Assuming the 90 days horizon Aquila Tax-free is expected to generate 1.9 times less return on investment than Nationwide Highmark. In addition to that, Aquila Tax-free is 1.53 times more volatile than Nationwide Highmark Short. It trades about 0.08 of its total potential returns per unit of risk. Nationwide Highmark Short is currently generating about 0.23 per unit of volatility. If you would invest  982.00  in Nationwide Highmark Short on December 22, 2024 and sell it today you would earn a total of  16.00  from holding Nationwide Highmark Short or generate 1.63% return on investment over 90 days.

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

Aquila Tax Free Fund  vs.  Nationwide Highmark Short

Aquila Tax Free

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aquila Tax Free Fund are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical 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.

Nationwide Highmark Short

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Nationwide Highmark Short are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Nationwide Highmark 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 Nationwide Highmark

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

The idea behind Aquila Tax Free Fund and Nationwide Highmark Short 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.