Correlation Between T Rowe and Aim Investment
Can any of the company-specific risk be diversified away by investing in both T Rowe 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 T Rowe and Aim Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between T Rowe Price and Aim Investment Securities, you can compare the effects of market volatilities on T Rowe 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 T Rowe with a short position of Aim Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of T Rowe and Aim Investment.
Diversification Opportunities for T Rowe and Aim Investment
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PRELX and Aim is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding T Rowe Price and Aim Investment Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aim Investment Securities and T Rowe 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 T Rowe Price 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 Securities has no effect on the direction of T Rowe i.e., T Rowe and Aim Investment go up and down completely randomly.
Pair Corralation between T Rowe and Aim Investment
Assuming the 90 days horizon T Rowe Price is expected to generate 3.11 times more return on investment than Aim Investment. However, T Rowe is 3.11 times more volatile than Aim Investment Securities. It trades about 0.21 of its potential returns per unit of risk. Aim Investment Securities is currently generating about 0.13 per unit of risk. If you would invest 464.00 in T Rowe Price on March 23, 2025 and sell it today you would earn a total of 25.00 from holding T Rowe Price or generate 5.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
T Rowe Price vs. Aim Investment Securities
Performance |
| Timeline |
| T Rowe Price |
| Aim Investment Securities |
T Rowe and Aim Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with T Rowe and Aim Investment
The main advantage of trading using opposite T Rowe and Aim Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T Rowe 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 T Rowe Price and Aim Investment Securities 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.| Aim Investment vs. Doubleline Global Bond | Aim Investment vs. Calvert Global Energy | Aim Investment vs. Tweedy Browne Global | Aim Investment vs. Fmi Global Institutional |
Check out your portfolio center.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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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