Correlation Between AIM ETF and ESSEX

Can any of the company-specific risk be diversified away by investing in both AIM ETF and ESSEX 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 ESSEX 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 ESSEX PORTFOLIO L, you can compare the effects of market volatilities on AIM ETF and ESSEX 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 ESSEX. Check out your portfolio center. Please also check ongoing floating volatility patterns of AIM ETF and ESSEX.

Diversification Opportunities for AIM ETF and ESSEX

-0.53

Correlation Coefficient

AIM ETF  ESSEX

Excellent diversification

The 3 months correlation between AIM and ESSEX is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding AIM ETF Products and ESSEX PORTFOLIO L in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ESSEX PORTFOLIO L 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 ESSEX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ESSEX PORTFOLIO L has no effect on the direction of AIM ETF i.e., AIM ETF and ESSEX go up and down completely randomly.

Pair Corralation between AIM ETF and ESSEX

Given the investment horizon of 90 days AIM ETF Products is expected to generate 0.4 times more return on investment than ESSEX. However, AIM ETF Products is 2.49 times less risky than ESSEX. It trades about 0.22 of its potential returns per unit of risk. ESSEX PORTFOLIO L is currently generating about -0.02 per unit of risk. If you would invest  3,292  in AIM ETF Products on September 24, 2024 and sell it today you would earn a total of  59.00  from holding AIM ETF Products or generate 1.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	90.63%
Values	Daily Returns

AIM ETF Products  vs.  ESSEX PORTFOLIO L

AIM ETF Products

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AIM ETF Products are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, AIM ETF is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

ESSEX PORTFOLIO L

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ESSEX PORTFOLIO L has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, ESSEX is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with AIM ETF and ESSEX

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

The idea behind AIM ETF Products and ESSEX PORTFOLIO L 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.