Correlation Between AIM ETF and IShares India

Can any of the company-specific risk be diversified away by investing in both AIM ETF and IShares India 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 IShares India 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 iShares India 50, you can compare the effects of market volatilities on AIM ETF and IShares India 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 IShares India. Check out your portfolio center. Please also check ongoing floating volatility patterns of AIM ETF and IShares India.

Diversification Opportunities for AIM ETF and IShares India

-0.67

Correlation Coefficient

AIM ETF  IShares India

Excellent diversification

The 3 months correlation between AIM and IShares is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding AIM ETF Products and iShares India 50 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares India 50 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 IShares India. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares India 50 has no effect on the direction of AIM ETF i.e., AIM ETF and IShares India go up and down completely randomly.

Pair Corralation between AIM ETF and IShares India

Given the investment horizon of 90 days AIM ETF Products is expected to generate 0.33 times more return on investment than IShares India. However, AIM ETF Products is 3.0 times less risky than IShares India. It trades about 0.25 of its potential returns per unit of risk. iShares India 50 is currently generating about -0.07 per unit of risk. If you would invest  2,577  in AIM ETF Products on September 2, 2024 and sell it today you would earn a total of  108.00  from holding AIM ETF Products or generate 4.19% return on investment over 90 days.

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

AIM ETF Products  vs.  iShares India 50

AIM ETF Products

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AIM ETF Products are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, AIM ETF is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

iShares India 50

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares India 50 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, IShares India is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with AIM ETF and IShares India

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

The idea behind AIM ETF Products and iShares India 50 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.