Correlation Between Aam Select and Aamhimco Short

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

By analyzing existing cross correlation between Aam Select Income and Aamhimco Short Duration, you can compare the effects of market volatilities on Aam Select and Aamhimco Short 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 Aam Select with a short position of Aamhimco Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aam Select and Aamhimco Short.

Diversification Opportunities for Aam Select and Aamhimco Short

0.95

Correlation Coefficient

Aam Select  Aamhimco Short

Almost no diversification

The 3 months correlation between Aam and Aamhimco is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Aam Select Income and Aamhimco Short Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aamhimco Short Duration and Aam Select 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 Aam Select Income are associated (or correlated) with Aamhimco Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aamhimco Short Duration has no effect on the direction of Aam Select i.e., Aam Select and Aamhimco Short go up and down completely randomly.

Pair Corralation between Aam Select and Aamhimco Short

Assuming the 90 days horizon Aam Select Income is expected to generate 3.23 times more return on investment than Aamhimco Short. However, Aam Select is 3.23 times more volatile than Aamhimco Short Duration. It trades about 0.17 of its potential returns per unit of risk. Aamhimco Short Duration is currently generating about 0.19 per unit of risk. If you would invest  900.00  in Aam Select Income on May 6, 2025 and sell it today you would earn a total of  29.00  from holding Aam Select Income or generate 3.22% return on investment over 90 days.

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

Aam Select Income  vs.  Aamhimco Short Duration

Aam Select Income

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aam Select Income are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Aam Select is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Aamhimco Short Duration

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aamhimco Short Duration are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Aamhimco Short is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Aam Select and Aamhimco Short

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

The idea behind Aam Select Income and Aamhimco Short Duration 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.