Correlation Between Aimia and Tree Island
Can any of the company-specific risk be diversified away by investing in both Aimia and Tree Island 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 Tree Island into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aimia Inc and Tree Island Steel, you can compare the effects of market volatilities on Aimia and Tree Island 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 Tree Island. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aimia and Tree Island.
Diversification Opportunities for Aimia and Tree Island
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Aimia and Tree is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Aimia Inc and Tree Island Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tree Island Steel 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 Tree Island. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tree Island Steel has no effect on the direction of Aimia i.e., Aimia and Tree Island go up and down completely randomly.
Pair Corralation between Aimia and Tree Island
Assuming the 90 days trading horizon Aimia Inc is expected to under-perform the Tree Island. But the stock apears to be less risky and, when comparing its historical volatility, Aimia Inc is 1.41 times less risky than Tree Island. The stock trades about -0.02 of its potential returns per unit of risk. The Tree Island Steel is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 260.00 in Tree Island Steel on September 4, 2024 and sell it today you would earn a total of 50.00 from holding Tree Island Steel or generate 19.23% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 98.44% |
Values | Daily Returns |
Aimia Inc vs. Tree Island Steel
Performance |
Timeline |
Aimia Inc |
Tree Island Steel |
Aimia and Tree Island Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Aimia and Tree Island
The main advantage of trading using opposite Aimia and Tree Island positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aimia position performs unexpectedly, Tree Island 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 Tree Island will offset losses from the drop in Tree Island's long position.Aimia vs. Autocanada | Aimia vs. Corus Entertainment | Aimia vs. Element Fleet Management | Aimia vs. Dorel Industries |
Tree Island vs. Supremex | Tree Island vs. Conifex Timber | Tree Island vs. Exco Technologies Limited | Tree Island vs. Taiga Building Products |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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