Correlation Between Visa and AIM ETF
Can any of the company-specific risk be diversified away by investing in both Visa 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 Visa and AIM ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Visa Class A and AIM ETF Products, you can compare the effects of market volatilities on Visa 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 Visa with a short position of AIM ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and AIM ETF.
Diversification Opportunities for Visa and AIM ETF
Poor diversification
The 3 months correlation between Visa and AIM is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A 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 Visa 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 Visa Class A 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 Visa i.e., Visa and AIM ETF go up and down completely randomly.
Pair Corralation between Visa and AIM ETF
Taking into account the 90-day investment horizon Visa Class A is expected to generate 10.99 times more return on investment than AIM ETF. However, Visa is 10.99 times more volatile than AIM ETF Products. It trades about 0.34 of its potential returns per unit of risk. AIM ETF Products is currently generating about 0.31 per unit of risk. If you would invest 28,365 in Visa Class A on August 28, 2024 and sell it today you would earn a total of 2,817 from holding Visa Class A or generate 9.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. AIM ETF Products
Performance |
| Timeline |
| Visa Class A |
| AIM ETF Products |
Visa and AIM ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and AIM ETF
The main advantage of trading using opposite Visa and AIM ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa 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.| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
| AIM ETF vs. FT Vest Equity | AIM ETF vs. Northern Lights | AIM ETF vs. Dimensional International High | AIM ETF vs. First Trust Exchange Traded |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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