Correlation Between Dow Jones and Aim Taxexempt
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Aim Taxexempt 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 Taxexempt 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 Taxexempt Funds, you can compare the effects of market volatilities on Dow Jones and Aim Taxexempt 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 Taxexempt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Aim Taxexempt.
Diversification Opportunities for Dow Jones and Aim Taxexempt
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dow and Aim is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Aim Taxexempt Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aim Taxexempt Funds 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 Taxexempt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aim Taxexempt Funds has no effect on the direction of Dow Jones i.e., Dow Jones and Aim Taxexempt go up and down completely randomly.
Pair Corralation between Dow Jones and Aim Taxexempt
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 2.63 times more return on investment than Aim Taxexempt. However, Dow Jones is 2.63 times more volatile than Aim Taxexempt Funds. It trades about 0.08 of its potential returns per unit of risk. Aim Taxexempt Funds is currently generating about 0.07 per unit of risk. If you would invest 3,400,504 in Dow Jones Industrial on September 1, 2024 and sell it today you would earn a total of 1,090,561 from holding Dow Jones Industrial or generate 32.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Dow Jones Industrial vs. Aim Taxexempt Funds
Performance |
| Timeline |
Dow Jones and Aim Taxexempt Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Aim Taxexempt Funds
Pair trading matchups for Aim Taxexempt
Pair Trading with Dow Jones and Aim Taxexempt
The main advantage of trading using opposite Dow Jones and Aim Taxexempt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Aim Taxexempt 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 Taxexempt will offset losses from the drop in Aim Taxexempt's long position.| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
| Aim Taxexempt vs. Invesco Municipal Income | Aim Taxexempt vs. Invesco Municipal Income | Aim Taxexempt vs. Invesco Municipal Income | Aim Taxexempt vs. Oppenheimer Rising Dividends |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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