Correlation Between Alpine Ultra and Aim Taxexempt

Can any of the company-specific risk be diversified away by investing in both Alpine Ultra and Aim Taxexempt 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 Alpine Ultra and Aim Taxexempt into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alpine Ultra Short and Aim Taxexempt Funds, you can compare the effects of market volatilities on Alpine Ultra and Aim Taxexempt 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 Alpine Ultra with a short position of Aim Taxexempt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alpine Ultra and Aim Taxexempt.

Diversification Opportunities for Alpine Ultra and Aim Taxexempt

0.37

Correlation Coefficient

Alpine Ultra  Aim Taxexempt

Weak diversification

The 3 months correlation between Alpine and Aim is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Alpine Ultra Short and Aim Taxexempt Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aim Taxexempt Funds and Alpine Ultra 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 Alpine Ultra Short are associated (or correlated) with Aim Taxexempt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aim Taxexempt Funds has no effect on the direction of Alpine Ultra i.e., Alpine Ultra and Aim Taxexempt go up and down completely randomly.

Pair Corralation between Alpine Ultra and Aim Taxexempt

Assuming the 90 days horizon Alpine Ultra is expected to generate 1.14 times less return on investment than Aim Taxexempt. But when comparing it to its historical volatility, Alpine Ultra Short is 4.7 times less risky than Aim Taxexempt. It trades about 0.22 of its potential returns per unit of risk. Aim Taxexempt Funds is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,012  in Aim Taxexempt Funds on December 19, 2024 and sell it today you would earn a total of  8.00  from holding Aim Taxexempt Funds or generate 0.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Alpine Ultra Short  vs.  Aim Taxexempt Funds

Alpine Ultra Short

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alpine Ultra Short are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Alpine Ultra is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Aim Taxexempt Funds

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Aim Taxexempt Funds are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Aim Taxexempt is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Alpine Ultra and Aim Taxexempt

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

The idea behind Alpine Ultra Short and Aim Taxexempt Funds 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.