Correlation Between Aimia and Renoworks Software
Can any of the company-specific risk be diversified away by investing in both Aimia and Renoworks Software 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 Renoworks Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aimia Inc and Renoworks Software, you can compare the effects of market volatilities on Aimia and Renoworks Software 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 Renoworks Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aimia and Renoworks Software.
Diversification Opportunities for Aimia and Renoworks Software
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Aimia and Renoworks is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Aimia Inc and Renoworks Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Renoworks Software 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 Renoworks Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Renoworks Software has no effect on the direction of Aimia i.e., Aimia and Renoworks Software go up and down completely randomly.
Pair Corralation between Aimia and Renoworks Software
Assuming the 90 days trading horizon Aimia Inc is expected to under-perform the Renoworks Software. But the stock apears to be less risky and, when comparing its historical volatility, Aimia Inc is 2.66 times less risky than Renoworks Software. The stock trades about -0.09 of its potential returns per unit of risk. The Renoworks Software is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 23.00 in Renoworks Software on August 25, 2024 and sell it today you would earn a total of 9.00 from holding Renoworks Software or generate 39.13% 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. Renoworks Software
Performance |
| Timeline |
| Aimia Inc |
| Renoworks Software |
Aimia and Renoworks Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aimia and Renoworks Software
The main advantage of trading using opposite Aimia and Renoworks Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aimia position performs unexpectedly, Renoworks Software 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 Renoworks Software will offset losses from the drop in Renoworks Software's long position.| Aimia vs. Autocanada | Aimia vs. Corus Entertainment | Aimia vs. Element Fleet Management | Aimia vs. Dorel Industries |
| Renoworks Software vs. Slate Grocery REIT | Renoworks Software vs. Roots Corp | Renoworks Software vs. Aimia Inc | Renoworks Software vs. Tucows Inc |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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