Correlation Between Aimia and Headwater Exploration
Can any of the company-specific risk be diversified away by investing in both Aimia and Headwater Exploration 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 Headwater Exploration into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aimia Inc and Headwater Exploration, you can compare the effects of market volatilities on Aimia and Headwater Exploration 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 Headwater Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aimia and Headwater Exploration.
Diversification Opportunities for Aimia and Headwater Exploration
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Aimia and Headwater is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Aimia Inc and Headwater Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Headwater Exploration 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 Headwater Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Headwater Exploration has no effect on the direction of Aimia i.e., Aimia and Headwater Exploration go up and down completely randomly.
Pair Corralation between Aimia and Headwater Exploration
Assuming the 90 days trading horizon Aimia Inc is expected to under-perform the Headwater Exploration. In addition to that, Aimia is 1.22 times more volatile than Headwater Exploration. It trades about -0.02 of its total potential returns per unit of risk. Headwater Exploration is currently generating about 0.04 per unit of volatility. If you would invest 606.00 in Headwater Exploration on September 4, 2024 and sell it today you would earn a total of 72.00 from holding Headwater Exploration or generate 11.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Aimia Inc vs. Headwater Exploration
Performance |
| Timeline |
| Aimia Inc |
| Headwater Exploration |
Aimia and Headwater Exploration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aimia and Headwater Exploration
The main advantage of trading using opposite Aimia and Headwater Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aimia position performs unexpectedly, Headwater Exploration 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 Headwater Exploration will offset losses from the drop in Headwater Exploration's long position.| Aimia vs. Autocanada | Aimia vs. Corus Entertainment | Aimia vs. Element Fleet Management | Aimia vs. Dorel Industries |
| Headwater Exploration vs. Tamarack Valley Energy | Headwater Exploration vs. Gear Energy | Headwater Exploration vs. Cardinal Energy | Headwater Exploration vs. NuVista Energy |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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