Correlation Between Aquila Tax and Counterpoint Tactical

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

Diversification Opportunities for Aquila Tax and Counterpoint Tactical

0.89

Correlation Coefficient

Aquila Tax  Counterpoint Tactical

Very poor diversification

The 3 months correlation between Aquila and Counterpoint is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Aquila Tax Free Fund and Counterpoint Tactical Municipa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Counterpoint Tactical 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 Fund are associated (or correlated) with Counterpoint Tactical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Counterpoint Tactical has no effect on the direction of Aquila Tax i.e., Aquila Tax and Counterpoint Tactical go up and down completely randomly.

Pair Corralation between Aquila Tax and Counterpoint Tactical

Assuming the 90 days horizon Aquila Tax is expected to generate 1.34 times less return on investment than Counterpoint Tactical. But when comparing it to its historical volatility, Aquila Tax Free Fund is 1.35 times less risky than Counterpoint Tactical. It trades about 0.03 of its potential returns per unit of risk. Counterpoint Tactical Municipal is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,099  in Counterpoint Tactical Municipal on September 13, 2024 and sell it today you would earn a total of  6.00  from holding Counterpoint Tactical Municipal or generate 0.55% 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 Fund  vs.  Counterpoint Tactical Municipa

Aquila Tax Free

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aquila Tax Free Fund are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. 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.

Counterpoint Tactical

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Counterpoint Tactical Municipal are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Counterpoint Tactical 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 Counterpoint Tactical

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

The idea behind Aquila Tax Free Fund and Counterpoint Tactical Municipal 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.