Correlation Between MicroSectors FANG and AIM ETF

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

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

Diversification Opportunities for MicroSectors FANG and AIM ETF

-0.92

Correlation Coefficient

MicroSectors FANG  AIM ETF

Pay attention - limited upside

The 3 months correlation between MicroSectors and AIM is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding MicroSectors FANG Index 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 MicroSectors FANG 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 MicroSectors FANG Index 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 MicroSectors FANG i.e., MicroSectors FANG and AIM ETF go up and down completely randomly.

Pair Corralation between MicroSectors FANG and AIM ETF

Given the investment horizon of 90 days MicroSectors FANG Index is expected to under-perform the AIM ETF. In addition to that, MicroSectors FANG is 10.75 times more volatile than AIM ETF Products. It trades about -0.11 of its total potential returns per unit of risk. AIM ETF Products is currently generating about 0.14 per unit of volatility. If you would invest  2,994  in AIM ETF Products on August 21, 2025 and sell it today you would earn a total of  82.00  from holding AIM ETF Products or generate 2.74% return on investment over 90 days.

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

MicroSectors FANG Index  vs.  AIM ETF Products

MicroSectors FANG Index

Risk-Adjusted Performance

Weakest

Over the last 90 days MicroSectors FANG Index has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Etf's technical and fundamental indicators remain rather sound which may send shares a bit higher in December 2025. The latest tumult may also be a sign of longer-term up-swing for the fund shareholders.

AIM ETF Products

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AIM ETF Products are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, AIM ETF is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with MicroSectors FANG and AIM ETF

The main advantage of trading using opposite MicroSectors FANG and AIM ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MicroSectors FANG 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 MicroSectors FANG Index 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.