Correlation Between Kentucky Tax and Eic Value

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

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

Diversification Opportunities for Kentucky Tax and Eic Value

-0.08

Correlation Coefficient

Kentucky Tax  Eic Value

Good diversification

The 3 months correlation between Kentucky and Eic is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Kentucky Tax Free Short To Med and Eic Value Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eic Value Fund and Kentucky 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 Kentucky Tax Free Short To Medium are associated (or correlated) with Eic Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eic Value Fund has no effect on the direction of Kentucky Tax i.e., Kentucky Tax and Eic Value go up and down completely randomly.

Pair Corralation between Kentucky Tax and Eic Value

Assuming the 90 days horizon Kentucky Tax Free Short To Medium is expected to generate 0.18 times more return on investment than Eic Value. However, Kentucky Tax Free Short To Medium is 5.45 times less risky than Eic Value. It trades about -0.1 of its potential returns per unit of risk. Eic Value Fund is currently generating about -0.04 per unit of risk. If you would invest  516.00  in Kentucky Tax Free Short To Medium on September 22, 2024 and sell it today you would lose (4.00) from holding Kentucky Tax Free Short To Medium or give up 0.78% of portfolio value over 90 days.

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

Kentucky Tax Free Short To Med  vs.  Eic Value Fund

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.

Eic Value Fund

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Kentucky Tax and Eic Value

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

The idea behind Kentucky Tax Free Short To Medium and Eic Value 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.