Correlation Between Aimia and Roots Corp
Can any of the company-specific risk be diversified away by investing in both Aimia and Roots Corp 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 Roots Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aimia Inc and Roots Corp, you can compare the effects of market volatilities on Aimia and Roots Corp 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 Roots Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aimia and Roots Corp.
Diversification Opportunities for Aimia and Roots Corp
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Aimia and Roots is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Aimia Inc and Roots Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roots Corp 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 Roots Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roots Corp has no effect on the direction of Aimia i.e., Aimia and Roots Corp go up and down completely randomly.
Pair Corralation between Aimia and Roots Corp
Assuming the 90 days trading horizon Aimia is expected to generate 1.13 times less return on investment than Roots Corp. But when comparing it to its historical volatility, Aimia Inc is 1.22 times less risky than Roots Corp. It trades about 0.08 of its potential returns per unit of risk. Roots Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 225.00 in Roots Corp on January 17, 2025 and sell it today you would earn a total of 9.00 from holding Roots Corp or generate 4.0% 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. Roots Corp
Performance |
| Timeline |
| Aimia Inc |
| Roots Corp |
Aimia and Roots Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aimia and Roots Corp
The main advantage of trading using opposite Aimia and Roots Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aimia position performs unexpectedly, Roots Corp 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 Roots Corp will offset losses from the drop in Roots Corp's long position.| Aimia vs. Autocanada | Aimia vs. Corus Entertainment | Aimia vs. Element Fleet Management | Aimia vs. Dorel Industries |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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