Correlation Between Dow Jones and AIM ETF
Can any of the company-specific risk be diversified away by investing in both Dow Jones and AIM ETF 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 Dow Jones and AIM ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and AIM ETF Products, you can compare the effects of market volatilities on Dow Jones and AIM ETF 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 Dow Jones with a short position of AIM ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and AIM ETF.
Diversification Opportunities for Dow Jones and AIM ETF
Poor diversification
The 3 months correlation between Dow and AIM is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and AIM ETF Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIM ETF Products and Dow Jones 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 Dow Jones Industrial are associated (or correlated) with AIM ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIM ETF Products has no effect on the direction of Dow Jones i.e., Dow Jones and AIM ETF go up and down completely randomly.
Pair Corralation between Dow Jones and AIM ETF
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 14.15 times more return on investment than AIM ETF. However, Dow Jones is 14.15 times more volatile than AIM ETF Products. It trades about 0.21 of its potential returns per unit of risk. AIM ETF Products is currently generating about 0.3 per unit of risk. If you would invest 4,237,436 in Dow Jones Industrial on August 25, 2024 and sell it today you would earn a total of 192,215 from holding Dow Jones Industrial or generate 4.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. AIM ETF Products
Performance |
| Timeline |
Dow Jones and AIM ETF Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
AIM ETF Products
Pair trading matchups for AIM ETF
Pair Trading with Dow Jones and AIM ETF
The main advantage of trading using opposite Dow Jones and AIM ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, AIM ETF 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 ETF will offset losses from the drop in AIM ETF's long position.| Dow Jones vs. Vistra Energy Corp | Dow Jones vs. Fluence Energy | Dow Jones vs. Old Republic International | Dow Jones vs. Empresa Distribuidora y |
| AIM ETF vs. AIM ETF Products | AIM ETF vs. AIM ETF Products | AIM ETF vs. AllianzIM Large Cap | AIM ETF vs. AIM ETF Products |
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 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.
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