Correlation Between Eafe Choice and Aim Investment
Can any of the company-specific risk be diversified away by investing in both Eafe Choice and Aim Investment 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 Eafe Choice and Aim Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Eafe Choice and Aim Investment Secs, you can compare the effects of market volatilities on Eafe Choice and Aim Investment 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 Eafe Choice with a short position of Aim Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eafe Choice and Aim Investment.
Diversification Opportunities for Eafe Choice and Aim Investment
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Eafe and Aim is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding The Eafe Choice and Aim Investment Secs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aim Investment Secs and Eafe Choice 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 The Eafe Choice are associated (or correlated) with Aim Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aim Investment Secs has no effect on the direction of Eafe Choice i.e., Eafe Choice and Aim Investment go up and down completely randomly.
Pair Corralation between Eafe Choice and Aim Investment
Assuming the 90 days horizon The Eafe Choice is expected to generate 7.22 times more return on investment than Aim Investment. However, Eafe Choice is 7.22 times more volatile than Aim Investment Secs. It trades about 0.04 of its potential returns per unit of risk. Aim Investment Secs is currently generating about 0.13 per unit of risk. If you would invest 1,386 in The Eafe Choice on September 2, 2024 and sell it today you would earn a total of 123.00 from holding The Eafe Choice or generate 8.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Eafe Choice vs. Aim Investment Secs
Performance |
| Timeline |
| Eafe Choice |
| Aim Investment Secs |
Eafe Choice and Aim Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eafe Choice and Aim Investment
The main advantage of trading using opposite Eafe Choice and Aim Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eafe Choice position performs unexpectedly, Aim Investment 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 Aim Investment will offset losses from the drop in Aim Investment's long position.| Eafe Choice vs. Blackrock Moderate Prepared | Eafe Choice vs. Saat Moderate Strategy | Eafe Choice vs. Target Retirement 2040 | Eafe Choice vs. Jp Morgan Smartretirement |
| Aim Investment vs. Vanguard Total Stock | Aim Investment vs. Vanguard 500 Index | Aim Investment vs. Vanguard Total Stock | Aim Investment vs. Vanguard Total Stock |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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