Correlation Between MSFY and AIM ETF

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

By analyzing existing cross correlation between MSFY and AIM ETF Products, you can compare the effects of market volatilities on MSFY and AIM ETF 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 MSFY with a short position of AIM ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of MSFY and AIM ETF.

Diversification Opportunities for MSFY and AIM ETF

0.47

Correlation Coefficient

MSFY  AIM ETF

Very weak diversification

The 3 months correlation between MSFY and AIM is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding MSFY and AIM ETF Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIM ETF Products and MSFY 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 MSFY are associated (or correlated) with AIM ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIM ETF Products has no effect on the direction of MSFY i.e., MSFY and AIM ETF go up and down completely randomly.

Pair Corralation between MSFY and AIM ETF

Given the investment horizon of 90 days MSFY is expected to generate 1.85 times more return on investment than AIM ETF. However, MSFY is 1.85 times more volatile than AIM ETF Products. It trades about 0.16 of its potential returns per unit of risk. AIM ETF Products is currently generating about 0.1 per unit of risk. If you would invest  2,345  in MSFY on March 21, 2024 and sell it today you would earn a total of  523.00  from holding MSFY or generate 22.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	38.78%
Values	Daily Returns

MSFY  vs.  AIM ETF Products

MSFY

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MSFY are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, MSFY is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

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 fundamental drivers, AIM ETF is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with MSFY and AIM ETF

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

The idea behind MSFY and AIM ETF Products 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.