Correlation Between ETF Series and AAM Low
Can any of the company-specific risk be diversified away by investing in both ETF Series and AAM Low 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 ETF Series and AAM Low into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ETF Series Solutions and AAM Low Duration, you can compare the effects of market volatilities on ETF Series and AAM Low 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 ETF Series with a short position of AAM Low. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETF Series and AAM Low.
Diversification Opportunities for ETF Series and AAM Low
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ETF and AAM is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding ETF Series Solutions and AAM Low Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AAM Low Duration and ETF Series 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 ETF Series Solutions are associated (or correlated) with AAM Low. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AAM Low Duration has no effect on the direction of ETF Series i.e., ETF Series and AAM Low go up and down completely randomly.
Pair Corralation between ETF Series and AAM Low
Given the investment horizon of 90 days ETF Series Solutions is expected to generate 4.03 times more return on investment than AAM Low. However, ETF Series is 4.03 times more volatile than AAM Low Duration. It trades about 0.28 of its potential returns per unit of risk. AAM Low Duration is currently generating about -0.13 per unit of risk. If you would invest 2,964 in ETF Series Solutions on August 30, 2024 and sell it today you would earn a total of 214.00 from holding ETF Series Solutions or generate 7.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ETF Series Solutions vs. AAM Low Duration
Performance |
| Timeline |
| ETF Series Solutions |
| AAM Low Duration |
ETF Series and AAM Low Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ETF Series and AAM Low
The main advantage of trading using opposite ETF Series and AAM Low positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETF Series position performs unexpectedly, AAM Low 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 AAM Low will offset losses from the drop in AAM Low's long position.| ETF Series vs. AAM Low Duration | ETF Series vs. 6 Meridian Low | ETF Series vs. Exchange Listed Funds | ETF Series vs. 6 Meridian Mega |
| AAM Low vs. Global X Variable | AAM Low vs. ETFis Series Trust | AAM Low vs. Innovator SP Investment | AAM Low vs. Principal Spectrum Preferred |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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