Correlation Between James Balanced and Aquila Tax

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

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

Diversification Opportunities for James Balanced and Aquila Tax

0.21

Correlation Coefficient

James Balanced  Aquila Tax

Modest diversification

The 3 months correlation between James and Aquila is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding James Balanced Golden and Aquila Tax Free Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aquila Tax Free and James Balanced 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 James Balanced Golden are associated (or correlated) with Aquila Tax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aquila Tax Free has no effect on the direction of James Balanced i.e., James Balanced and Aquila Tax go up and down completely randomly.

Pair Corralation between James Balanced and Aquila Tax

Assuming the 90 days horizon James Balanced is expected to generate 1.36 times less return on investment than Aquila Tax. In addition to that, James Balanced is 2.32 times more volatile than Aquila Tax Free Fund. It trades about 0.02 of its total potential returns per unit of risk. Aquila Tax Free Fund is currently generating about 0.05 per unit of volatility. If you would invest  980.00  in Aquila Tax Free Fund on September 12, 2024 and sell it today you would earn a total of  6.00  from holding Aquila Tax Free Fund or generate 0.61% return on investment over 90 days.

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

James Balanced Golden  vs.  Aquila Tax Free Fund

James Balanced Golden

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in James Balanced Golden are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, James Balanced is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Aquila Tax Free

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Aquila Tax Free Fund are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Aquila 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 James Balanced and Aquila Tax

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

The idea behind James Balanced Golden and Aquila Tax Free 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.

Check out your portfolio center.

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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.