Correlation Between Aim International and Invesco Nasdaq

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

By analyzing existing cross correlation between Aim International Mutual and Invesco Nasdaq 100, you can compare the effects of market volatilities on Aim International and Invesco Nasdaq 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 International with a short position of Invesco Nasdaq. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aim International and Invesco Nasdaq.

Diversification Opportunities for Aim International and Invesco Nasdaq

-0.7

Correlation Coefficient

Aim International  Invesco Nasdaq

Excellent diversification

The 3 months correlation between Aim and Invesco is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Aim International Mutual and Invesco Nasdaq 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Nasdaq 100 and Aim 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 Aim International Mutual are associated (or correlated) with Invesco Nasdaq. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Nasdaq 100 has no effect on the direction of Aim International i.e., Aim International and Invesco Nasdaq go up and down completely randomly.

Pair Corralation between Aim International and Invesco Nasdaq

Assuming the 90 days horizon Aim International Mutual is expected to under-perform the Invesco Nasdaq. But the mutual fund apears to be less risky and, when comparing its historical volatility, Aim International Mutual is 1.05 times less risky than Invesco Nasdaq. The mutual fund trades about -0.03 of its potential returns per unit of risk. The Invesco Nasdaq 100 is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  3,403  in Invesco Nasdaq 100 on September 15, 2024 and sell it today you would earn a total of  1,079  from holding Invesco Nasdaq 100 or generate 31.71% return on investment over 90 days.

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

Aim International Mutual  vs.  Invesco Nasdaq 100

Aim International Mutual

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aim International Mutual 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 essential indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Invesco Nasdaq 100

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Nasdaq 100 are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Invesco Nasdaq may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Aim International and Invesco Nasdaq

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

The idea behind Aim International Mutual and Invesco Nasdaq 100 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.