Correlation Between Dimensional International and AIM ETF

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

By analyzing existing cross correlation between Dimensional International High and AIM ETF Products, you can compare the effects of market volatilities on Dimensional International 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 Dimensional International with a short position of AIM ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimensional International and AIM ETF.

Diversification Opportunities for Dimensional International and AIM ETF

-0.48

Correlation Coefficient

Dimensional International  AIM ETF

Very good diversification

The 3 months correlation between Dimensional and AIM is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional International High 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 Dimensional International 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 Dimensional International High 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 Dimensional International i.e., Dimensional International and AIM ETF go up and down completely randomly.

Pair Corralation between Dimensional International and AIM ETF

Given the investment horizon of 90 days Dimensional International High is expected to under-perform the AIM ETF. In addition to that, Dimensional International is 2.53 times more volatile than AIM ETF Products. It trades about -0.05 of its total potential returns per unit of risk. AIM ETF Products is currently generating about 0.25 per unit of volatility. If you would invest  2,647  in AIM ETF Products on September 12, 2024 and sell it today you would earn a total of  130.00  from holding AIM ETF Products or generate 4.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Dimensional International High  vs.  AIM ETF Products

Dimensional International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dimensional International High has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical indicators, Dimensional International is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

AIM ETF Products

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AIM ETF Products are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, AIM ETF is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Dimensional International and AIM ETF

The main advantage of trading using opposite Dimensional International and AIM ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimensional International 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.

The idea behind Dimensional International High and AIM ETF Products 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.