Correlation Between Global Core and Kansas Tax

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

By analyzing existing cross correlation between Global E Portfolio and The Kansas Tax Free, you can compare the effects of market volatilities on Global Core and Kansas 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 Global Core with a short position of Kansas Tax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Core and Kansas Tax.

Diversification Opportunities for Global Core and Kansas Tax

-0.47

Correlation Coefficient

Global Core  Kansas Tax

Very good diversification

The 3 months correlation between Global and Kansas is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Global E Portfolio and The Kansas Tax Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kansas Tax and Global Core 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 Global E Portfolio are associated (or correlated) with Kansas Tax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kansas Tax has no effect on the direction of Global Core i.e., Global Core and Kansas Tax go up and down completely randomly.

Pair Corralation between Global Core and Kansas Tax

Assuming the 90 days horizon Global E Portfolio is expected to generate 4.08 times more return on investment than Kansas Tax. However, Global Core is 4.08 times more volatile than The Kansas Tax Free. It trades about 0.17 of its potential returns per unit of risk. The Kansas Tax Free is currently generating about 0.04 per unit of risk. If you would invest  1,987  in Global E Portfolio on September 2, 2024 and sell it today you would earn a total of  167.00  from holding Global E Portfolio or generate 8.4% return on investment over 90 days.

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

Global E Portfolio  vs.  The Kansas Tax Free

Global E Portfolio

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global E Portfolio are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Global Core may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Kansas Tax

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in The Kansas Tax Free are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Kansas 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 Global Core and Kansas Tax

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

The idea behind Global E Portfolio and The Kansas Tax Free 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.