Correlation Between AIM ETF and SPDR Portfolio

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

Diversification Opportunities for AIM ETF and SPDR Portfolio

-0.4

Correlation Coefficient

AIM ETF  SPDR Portfolio

Very good diversification

The 3 months correlation between AIM and SPDR is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding AIM ETF Products and SPDR Portfolio Corporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Portfolio Corporate 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 SPDR Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Portfolio Corporate has no effect on the direction of AIM ETF i.e., AIM ETF and SPDR Portfolio go up and down completely randomly.

Pair Corralation between AIM ETF and SPDR Portfolio

Given the investment horizon of 90 days AIM ETF Products is expected to under-perform the SPDR Portfolio. But the etf apears to be less risky and, when comparing its historical volatility, AIM ETF Products is 1.15 times less risky than SPDR Portfolio. The etf trades about -0.08 of its potential returns per unit of risk. The SPDR Portfolio Corporate is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  2,875  in SPDR Portfolio Corporate on September 23, 2024 and sell it today you would lose (9.00) from holding SPDR Portfolio Corporate or give up 0.31% of portfolio value over 90 days.

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

AIM ETF Products  vs.  SPDR Portfolio Corporate

AIM ETF Products

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AIM ETF Products are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, AIM ETF is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

SPDR Portfolio Corporate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPDR Portfolio Corporate has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental drivers, SPDR Portfolio is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with AIM ETF and SPDR Portfolio

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

The idea behind AIM ETF Products and SPDR Portfolio Corporate 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..