Correlation Between Cash Account and Aim Investment

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

By analyzing existing cross correlation between Cash Account Trust and Aim Investment Secs, you can compare the effects of market volatilities on Cash Account and Aim 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 Cash Account with a short position of Aim Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cash Account and Aim Investment.

Diversification Opportunities for Cash Account and Aim Investment

0.88

Correlation Coefficient

Cash Account  Aim Investment

Very poor diversification

The 3 months correlation between Cash and Aim is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Cash Account Trust and Aim Investment Secs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aim Investment Secs and Cash Account 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 Cash Account Trust are associated (or correlated) with Aim Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aim Investment Secs has no effect on the direction of Cash Account i.e., Cash Account and Aim Investment go up and down completely randomly.

Pair Corralation between Cash Account and Aim Investment

Assuming the 90 days horizon Cash Account is expected to generate 1.02 times less return on investment than Aim Investment. In addition to that, Cash Account is 1.71 times more volatile than Aim Investment Secs. It trades about 0.07 of its total potential returns per unit of risk. Aim Investment Secs is currently generating about 0.13 per unit of volatility. If you would invest  99.00  in Aim Investment Secs on February 8, 2024 and sell it today you would earn a total of  1.00  from holding Aim Investment Secs or generate 1.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	96.92%
Values	Daily Returns

Cash Account Trust  vs.  Aim Investment Secs

Cash Account Trust

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cash Account Trust are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Cash Account is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Aim Investment Secs

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aim Investment Secs are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Aim Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cash Account and Aim Investment

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

The idea behind Cash Account Trust and Aim Investment Secs 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.