Correlation Between AIM ETF and Financial Select
Can any of the company-specific risk be diversified away by investing in both AIM ETF and Financial Select 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 AIM ETF and Financial Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AIM ETF Products and Financial Select Sector, you can compare the effects of market volatilities on AIM ETF and Financial Select 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 AIM ETF with a short position of Financial Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of AIM ETF and Financial Select.
Diversification Opportunities for AIM ETF and Financial Select
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between AIM and Financial is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding AIM ETF Products and Financial Select Sector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Financial Select Sector and AIM ETF 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 AIM ETF Products are associated (or correlated) with Financial Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Financial Select Sector has no effect on the direction of AIM ETF i.e., AIM ETF and Financial Select go up and down completely randomly.
Pair Corralation between AIM ETF and Financial Select
Given the investment horizon of 90 days AIM ETF is expected to generate 1.16 times less return on investment than Financial Select. But when comparing it to its historical volatility, AIM ETF Products is 3.26 times less risky than Financial Select. It trades about 0.24 of its potential returns per unit of risk. Financial Select Sector is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 5,089 in Financial Select Sector on June 10, 2025 and sell it today you would earn a total of 218.00 from holding Financial Select Sector or generate 4.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.41% |
| Values | Daily Returns |
AIM ETF Products vs. Financial Select Sector
Performance |
| Timeline |
| AIM ETF Products |
| Financial Select Sector |
AIM ETF and Financial Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AIM ETF and Financial Select
The main advantage of trading using opposite AIM ETF and Financial Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AIM ETF position performs unexpectedly, Financial Select 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 Financial Select will offset losses from the drop in Financial Select's long position.| AIM ETF vs. FT Vest Equity | AIM ETF vs. Northern Lights | AIM ETF vs. Dimensional International High | AIM ETF vs. JPMorgan Fundamental Data |
| Financial Select vs. Energy Select Sector | Financial Select vs. Technology Select Sector | Financial Select vs. Health Care Select | Financial Select vs. Industrial Select Sector |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
Other Complementary Tools
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum |