Correlation Between Aquila Three and Growth Strategy

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

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

Diversification Opportunities for Aquila Three and Growth Strategy

0.16

Correlation Coefficient

Aquila Three  Growth Strategy

Average diversification

The 3 months correlation between Aquila and GROWTH is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Aquila Three Peaks and Growth Strategy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Strategy and Aquila Three 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 Three Peaks are associated (or correlated) with Growth Strategy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Strategy has no effect on the direction of Aquila Three i.e., Aquila Three and Growth Strategy go up and down completely randomly.

Pair Corralation between Aquila Three and Growth Strategy

Assuming the 90 days horizon Aquila Three Peaks is expected to under-perform the Growth Strategy. But the mutual fund apears to be less risky and, when comparing its historical volatility, Aquila Three Peaks is 3.89 times less risky than Growth Strategy. The mutual fund trades about -0.01 of its potential returns per unit of risk. The Growth Strategy Fund is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1,154  in Growth Strategy Fund on September 5, 2024 and sell it today you would earn a total of  55.00  from holding Growth Strategy Fund or generate 4.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	93.65%
Values	Daily Returns

Aquila Three Peaks  vs.  Growth Strategy Fund

Aquila Three Peaks

Risk-Adjusted Performance

0 of 100

Very Weak

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

Growth Strategy

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Growth Strategy Fund are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Growth Strategy 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 Three and Growth Strategy

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

The idea behind Aquila Three Peaks and Growth Strategy 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 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.