Correlation Between Dana Large and Aim Taxexempt

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

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

Diversification Opportunities for Dana Large and Aim Taxexempt

-0.25

Correlation Coefficient

Dana Large  Aim Taxexempt

Very good diversification

The 3 months correlation between Dana and Aim is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Dana Large Cap 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 Dana Large 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 Dana Large Cap 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 Dana Large i.e., Dana Large and Aim Taxexempt go up and down completely randomly.

Pair Corralation between Dana Large and Aim Taxexempt

Assuming the 90 days horizon Dana Large Cap is expected to under-perform the Aim Taxexempt. In addition to that, Dana Large is 10.19 times more volatile than Aim Taxexempt Funds. It trades about -0.14 of its total potential returns per unit of risk. Aim Taxexempt Funds is currently generating about -0.03 per unit of volatility. If you would invest  1,016  in Aim Taxexempt Funds on December 26, 2024 and sell it today you would lose (5.00) from holding Aim Taxexempt Funds or give up 0.49% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Dana Large Cap  vs.  Aim Taxexempt Funds

Dana Large Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dana Large Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's forward indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Aim Taxexempt Funds

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aim Taxexempt Funds has generated negative risk-adjusted returns adding no value to fund investors. 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 Dana Large and Aim Taxexempt

The main advantage of trading using opposite Dana Large and Aim Taxexempt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dana Large 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 Dana Large Cap 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.