Correlation Between Aimia and Bank of Montreal
Can any of the company-specific risk be diversified away by investing in both Aimia and Bank of Montreal 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 Bank of Montreal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aimia Inc and Bank of Montreal, you can compare the effects of market volatilities on Aimia and Bank of Montreal 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 Bank of Montreal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aimia and Bank of Montreal.
Diversification Opportunities for Aimia and Bank of Montreal
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Aimia and Bank is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Aimia Inc and Bank of Montreal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Montreal 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 Bank of Montreal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Montreal has no effect on the direction of Aimia i.e., Aimia and Bank of Montreal go up and down completely randomly.
Pair Corralation between Aimia and Bank of Montreal
Assuming the 90 days trading horizon Aimia Inc is expected to under-perform the Bank of Montreal. In addition to that, Aimia is 2.77 times more volatile than Bank of Montreal. It trades about -0.05 of its total potential returns per unit of risk. Bank of Montreal is currently generating about 0.09 per unit of volatility. If you would invest 2,316 in Bank of Montreal on September 3, 2024 and sell it today you would earn a total of 183.00 from holding Bank of Montreal or generate 7.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 96.8% |
| Values | Daily Returns |
Aimia Inc vs. Bank of Montreal
Performance |
| Timeline |
| Aimia Inc |
| Bank of Montreal |
Aimia and Bank of Montreal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aimia and Bank of Montreal
The main advantage of trading using opposite Aimia and Bank of Montreal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aimia position performs unexpectedly, Bank of Montreal 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 Bank of Montreal will offset losses from the drop in Bank of Montreal's long position.| Aimia vs. Autocanada | Aimia vs. Corus Entertainment | Aimia vs. Element Fleet Management | Aimia vs. Dorel Industries |
| Bank of Montreal vs. Atrium Mortgage Investment | Bank of Montreal vs. Canadian General Investments | Bank of Montreal vs. Bip Investment Corp | Bank of Montreal vs. TGS Esports |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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