Correlation Between American Independence and Kansas Municipal

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

By analyzing existing cross correlation between American Independence Kansas and Kansas Municipal Fund, you can compare the effects of market volatilities on American Independence and Kansas Municipal 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 American Independence with a short position of Kansas Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Independence and Kansas Municipal.

Diversification Opportunities for American Independence and Kansas Municipal

0.96

Correlation Coefficient

American Independence  Kansas Municipal

Almost no diversification

The 3 months correlation between American and Kansas is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding American Independence Kansas and Kansas Municipal Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kansas Municipal and American Independence 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 American Independence Kansas are associated (or correlated) with Kansas Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kansas Municipal has no effect on the direction of American Independence i.e., American Independence and Kansas Municipal go up and down completely randomly.

Pair Corralation between American Independence and Kansas Municipal

Assuming the 90 days horizon American Independence Kansas is expected to generate 0.67 times more return on investment than Kansas Municipal. However, American Independence Kansas is 1.49 times less risky than Kansas Municipal. It trades about 0.05 of its potential returns per unit of risk. Kansas Municipal Fund is currently generating about 0.02 per unit of risk. If you would invest  1,013  in American Independence Kansas on August 31, 2024 and sell it today you would earn a total of  6.00  from holding American Independence Kansas or generate 0.59% return on investment over 90 days.

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

American Independence Kansas  vs.  Kansas Municipal Fund

American Independence

Risk-Adjusted Performance

4 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in American Independence Kansas are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, American Independence is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Kansas Municipal

Risk-Adjusted Performance

1 of 100

Weak

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

Pair Trading with American Independence and Kansas Municipal

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

The idea behind American Independence Kansas and Kansas Municipal 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.