Correlation Between Aimia and Autocanada

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

By analyzing existing cross correlation between Aimia Inc and Autocanada, you can compare the effects of market volatilities on Aimia and Autocanada 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 Aimia with a short position of Autocanada. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aimia and Autocanada.

Diversification Opportunities for Aimia and Autocanada

-0.37

Correlation Coefficient

Aimia  Autocanada

Very good diversification

The 3 months correlation between Aimia and Autocanada is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Aimia Inc and Autocanada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autocanada and Aimia 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 Aimia Inc are associated (or correlated) with Autocanada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Autocanada has no effect on the direction of Aimia i.e., Aimia and Autocanada go up and down completely randomly.

Pair Corralation between Aimia and Autocanada

Assuming the 90 days trading horizon Aimia is expected to generate 14.64 times less return on investment than Autocanada. But when comparing it to its historical volatility, Aimia Inc is 1.86 times less risky than Autocanada. It trades about 0.02 of its potential returns per unit of risk. Autocanada is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1,390  in Autocanada on September 2, 2024 and sell it today you would earn a total of  489.00  from holding Autocanada or generate 35.18% return on investment over 90 days.

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

Aimia Inc  vs.  Autocanada

Aimia Inc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aimia Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, Aimia is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Autocanada

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Autocanada are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Autocanada displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aimia and Autocanada

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

The idea behind Aimia Inc and Autocanada 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.

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.