Correlation Between Ditto Public and AIM Commercial

Can any of the company-specific risk be diversified away by investing in both Ditto Public and AIM Commercial 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 Ditto Public and AIM Commercial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ditto Public and AIM Commercial Growth, you can compare the effects of market volatilities on Ditto Public and AIM Commercial 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 Ditto Public with a short position of AIM Commercial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ditto Public and AIM Commercial.

Diversification Opportunities for Ditto Public and AIM Commercial

0.61

Correlation Coefficient

Ditto Public  AIM Commercial

Poor diversification

The 3 months correlation between Ditto and AIM is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Ditto Public and AIM Commercial Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIM Commercial Growth and Ditto Public 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 Ditto Public are associated (or correlated) with AIM Commercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIM Commercial Growth has no effect on the direction of Ditto Public i.e., Ditto Public and AIM Commercial go up and down completely randomly.

Pair Corralation between Ditto Public and AIM Commercial

Assuming the 90 days trading horizon Ditto Public is expected to under-perform the AIM Commercial. In addition to that, Ditto Public is 2.08 times more volatile than AIM Commercial Growth. It trades about -0.04 of its total potential returns per unit of risk. AIM Commercial Growth is currently generating about -0.01 per unit of volatility. If you would invest  308.00  in AIM Commercial Growth on September 5, 2024 and sell it today you would lose (4.00) from holding AIM Commercial Growth or give up 1.3% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Ditto Public  vs.  AIM Commercial Growth

Ditto Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ditto Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

AIM Commercial Growth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AIM Commercial Growth has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, AIM Commercial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ditto Public and AIM Commercial

The main advantage of trading using opposite Ditto Public and AIM Commercial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ditto Public position performs unexpectedly, AIM Commercial 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 Commercial will offset losses from the drop in AIM Commercial's long position.

The idea behind Ditto Public and AIM Commercial Growth pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.