Correlation Between AIM ETF and FlexShares Quality
Can any of the company-specific risk be diversified away by investing in both AIM ETF and FlexShares Quality 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 FlexShares Quality 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 FlexShares Quality Low, you can compare the effects of market volatilities on AIM ETF and FlexShares Quality 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 FlexShares Quality. Check out your portfolio center. Please also check ongoing floating volatility patterns of AIM ETF and FlexShares Quality.
Diversification Opportunities for AIM ETF and FlexShares Quality
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between AIM and FlexShares is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding AIM ETF Products and FlexShares Quality Low in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FlexShares Quality Low 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 FlexShares Quality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FlexShares Quality Low has no effect on the direction of AIM ETF i.e., AIM ETF and FlexShares Quality go up and down completely randomly.
Pair Corralation between AIM ETF and FlexShares Quality
Given the investment horizon of 90 days AIM ETF is expected to generate 2.19 times less return on investment than FlexShares Quality. But when comparing it to its historical volatility, AIM ETF Products is 3.16 times less risky than FlexShares Quality. It trades about 0.47 of its potential returns per unit of risk. FlexShares Quality Low is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 6,553 in FlexShares Quality Low on September 2, 2024 and sell it today you would earn a total of 257.00 from holding FlexShares Quality Low or generate 3.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
AIM ETF Products vs. FlexShares Quality Low
Performance |
| Timeline |
| AIM ETF Products |
| FlexShares Quality Low |
AIM ETF and FlexShares Quality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AIM ETF and FlexShares Quality
The main advantage of trading using opposite AIM ETF and FlexShares Quality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AIM ETF position performs unexpectedly, FlexShares Quality 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 FlexShares Quality will offset losses from the drop in FlexShares Quality'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 |
| FlexShares Quality vs. Vanguard Total Stock | FlexShares Quality vs. SPDR SP 500 | FlexShares Quality vs. iShares Core SP | FlexShares Quality vs. Vanguard Dividend Appreciation |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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