Correlation Between AIM ETF and Foundations Dynamic
Can any of the company-specific risk be diversified away by investing in both AIM ETF and Foundations Dynamic 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 AIM ETF and Foundations Dynamic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AIM ETF Products and Foundations Dynamic Core, you can compare the effects of market volatilities on AIM ETF and Foundations Dynamic 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 AIM ETF with a short position of Foundations Dynamic. Check out your portfolio center. Please also check ongoing floating volatility patterns of AIM ETF and Foundations Dynamic.
Diversification Opportunities for AIM ETF and Foundations Dynamic
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between AIM and Foundations is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding AIM ETF Products and Foundations Dynamic Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foundations Dynamic Core and AIM ETF 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 AIM ETF Products are associated (or correlated) with Foundations Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foundations Dynamic Core has no effect on the direction of AIM ETF i.e., AIM ETF and Foundations Dynamic go up and down completely randomly.
Pair Corralation between AIM ETF and Foundations Dynamic
Given the investment horizon of 90 days AIM ETF is expected to generate 1.94 times less return on investment than Foundations Dynamic. But when comparing it to its historical volatility, AIM ETF Products is 2.47 times less risky than Foundations Dynamic. It trades about 0.15 of its potential returns per unit of risk. Foundations Dynamic Core is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,171 in Foundations Dynamic Core on September 1, 2024 and sell it today you would earn a total of 168.00 from holding Foundations Dynamic Core or generate 14.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
AIM ETF Products vs. Foundations Dynamic Core
Performance |
| Timeline |
| AIM ETF Products |
| Foundations Dynamic Core |
AIM ETF and Foundations Dynamic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AIM ETF and Foundations Dynamic
The main advantage of trading using opposite AIM ETF and Foundations Dynamic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AIM ETF position performs unexpectedly, Foundations Dynamic 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 Foundations Dynamic will offset losses from the drop in Foundations Dynamic's long position.| AIM ETF vs. FT Vest Equity | AIM ETF vs. Northern Lights | AIM ETF vs. Dimensional International High | AIM ETF vs. Matthews China Discovery |
| Foundations Dynamic vs. Freedom Day Dividend | Foundations Dynamic vs. iShares MSCI China | Foundations Dynamic vs. iShares Dividend and | Foundations Dynamic vs. SmartETFs Dividend Builder |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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