Correlation Between Aimia and Imperial Oil

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

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

Diversification Opportunities for Aimia and Imperial Oil

-0.58

Correlation Coefficient

Aimia  Imperial Oil

Excellent diversification

The 3 months correlation between Aimia and Imperial is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Aimia Inc and Imperial Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Imperial Oil 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 Imperial Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Imperial Oil has no effect on the direction of Aimia i.e., Aimia and Imperial Oil go up and down completely randomly.

Pair Corralation between Aimia and Imperial Oil

Assuming the 90 days trading horizon Aimia is expected to generate 2.75 times less return on investment than Imperial Oil. In addition to that, Aimia is 1.12 times more volatile than Imperial Oil. It trades about 0.03 of its total potential returns per unit of risk. Imperial Oil is currently generating about 0.09 per unit of volatility. If you would invest  9,184  in Imperial Oil on September 9, 2024 and sell it today you would earn a total of  917.00  from holding Imperial Oil or generate 9.98% return on investment over 90 days.

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

Aimia Inc  vs.  Imperial Oil

Aimia Inc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aimia Inc are ranked lower than 2 (%) 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 current stock price disarray, may contribute to short-term losses for the investors.

Imperial Oil

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Imperial Oil are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Imperial Oil may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Aimia and Imperial Oil

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

The idea behind Aimia Inc and Imperial Oil 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.