Correlation Between City National and Kentucky Tax

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

By analyzing existing cross correlation between City National Rochdale and Kentucky Tax Free Short To Medium, you can compare the effects of market volatilities on City National and Kentucky Tax 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 City National with a short position of Kentucky Tax. Check out your portfolio center. Please also check ongoing floating volatility patterns of City National and Kentucky Tax.

Diversification Opportunities for City National and Kentucky Tax

-0.2

Correlation Coefficient

City National  Kentucky Tax

Good diversification

The 3 months correlation between City and Kentucky is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding City National Rochdale and Kentucky Tax Free Short To Med in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kentucky Tax Free and City National 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 City National Rochdale are associated (or correlated) with Kentucky Tax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kentucky Tax Free has no effect on the direction of City National i.e., City National and Kentucky Tax go up and down completely randomly.

Pair Corralation between City National and Kentucky Tax

Assuming the 90 days horizon City National Rochdale is expected to generate 5.92 times more return on investment than Kentucky Tax. However, City National is 5.92 times more volatile than Kentucky Tax Free Short To Medium. It trades about 0.15 of its potential returns per unit of risk. Kentucky Tax Free Short To Medium is currently generating about 0.0 per unit of risk. If you would invest  2,764  in City National Rochdale on September 13, 2024 and sell it today you would earn a total of  182.00  from holding City National Rochdale or generate 6.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

City National Rochdale  vs.  Kentucky Tax Free Short To Med

City National Rochdale

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in City National Rochdale are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, City National may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Kentucky Tax Free

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with City National and Kentucky Tax

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

The idea behind City National Rochdale and Kentucky Tax Free Short To Medium 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.