Correlation Between AIM ETF and Western Asset

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

Diversification Opportunities for AIM ETF and Western Asset

-0.85

Correlation Coefficient

AIM ETF  Western Asset

Pay attention - limited upside

The 3 months correlation between AIM and Western is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding AIM ETF Products and Western Asset Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Global 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 Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Global has no effect on the direction of AIM ETF i.e., AIM ETF and Western Asset go up and down completely randomly.

Pair Corralation between AIM ETF and Western Asset

Given the investment horizon of 90 days AIM ETF Products is expected to generate 0.49 times more return on investment than Western Asset. However, AIM ETF Products is 2.06 times less risky than Western Asset. It trades about 0.14 of its potential returns per unit of risk. Western Asset Global is currently generating about 0.01 per unit of risk. If you would invest  2,752  in AIM ETF Products on September 29, 2024 and sell it today you would earn a total of  605.00  from holding AIM ETF Products or generate 21.98% return on investment over 90 days.

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

AIM ETF Products  vs.  Western Asset Global

AIM ETF Products

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AIM ETF Products are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, AIM ETF is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Western Asset Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Western Asset Global has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Etf's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

Pair Trading with AIM ETF and Western Asset

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

The idea behind AIM ETF Products and Western Asset Global 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.

Check out your portfolio center.

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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.