Correlation Between New York and Aim Taxexempt

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

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

Diversification Opportunities for New York and Aim Taxexempt

0.6

Correlation Coefficient

New York  Aim Taxexempt

Poor diversification

The 3 months correlation between New and Aim is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding New York Municipal 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 New York 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 New York Municipal 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 New York i.e., New York and Aim Taxexempt go up and down completely randomly.

Pair Corralation between New York and Aim Taxexempt

Assuming the 90 days horizon New York Municipal is expected to under-perform the Aim Taxexempt. But the mutual fund apears to be less risky and, when comparing its historical volatility, New York Municipal is 1.32 times less risky than Aim Taxexempt. The mutual fund trades about -0.37 of its potential returns per unit of risk. The Aim Taxexempt Funds is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest  280.00  in Aim Taxexempt Funds on January 20, 2024 and sell it today you would lose (1.00) from holding Aim Taxexempt Funds or give up 0.36% of portfolio value over 90 days.

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

New York Municipal  vs.  Aim Taxexempt Funds

New York Municipal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days New York Municipal has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, New York is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Aim Taxexempt Funds

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aim Taxexempt Funds are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary 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 New York and Aim Taxexempt

The main advantage of trading using opposite New York and Aim Taxexempt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New York 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 New York Municipal 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.