Correlation Between Pool and Aimfinity Investment

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

By analyzing existing cross correlation between Pool Corporation and Aimfinity Investment I, you can compare the effects of market volatilities on Pool and Aimfinity Investment 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 Pool with a short position of Aimfinity Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pool and Aimfinity Investment.

Diversification Opportunities for Pool and Aimfinity Investment

0.44

Correlation Coefficient

Pool  Aimfinity Investment

Very weak diversification

The 3 months correlation between Pool and Aimfinity is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Pool Corp. and Aimfinity Investment I in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aimfinity Investment and Pool 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 Pool Corporation are associated (or correlated) with Aimfinity Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aimfinity Investment has no effect on the direction of Pool i.e., Pool and Aimfinity Investment go up and down completely randomly.

Pair Corralation between Pool and Aimfinity Investment

Given the investment horizon of 90 days Pool Corporation is expected to generate 5.0 times more return on investment than Aimfinity Investment. However, Pool is 5.0 times more volatile than Aimfinity Investment I. It trades about 0.04 of its potential returns per unit of risk. Aimfinity Investment I is currently generating about 0.12 per unit of risk. If you would invest  35,728  in Pool Corporation on September 14, 2024 and sell it today you would earn a total of  1,226  from holding Pool Corporation or generate 3.43% return on investment over 90 days.

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

Pool Corp.  vs.  Aimfinity Investment I

Pool

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pool Corporation are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Pool is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Aimfinity Investment

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aimfinity Investment I are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Aimfinity Investment is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Pool and Aimfinity Investment

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

The idea behind Pool Corporation and Aimfinity Investment I 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..