Correlation Between Dorel Industries and Aimia
Can any of the company-specific risk be diversified away by investing in both Dorel Industries and Aimia 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 Dorel Industries and Aimia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dorel Industries and Aimia Inc, you can compare the effects of market volatilities on Dorel Industries and Aimia 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 Dorel Industries with a short position of Aimia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dorel Industries and Aimia.
Diversification Opportunities for Dorel Industries and Aimia
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Dorel and Aimia is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Dorel Industries and Aimia Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aimia Inc and Dorel Industries 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 Dorel Industries are associated (or correlated) with Aimia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aimia Inc has no effect on the direction of Dorel Industries i.e., Dorel Industries and Aimia go up and down completely randomly.
Pair Corralation between Dorel Industries and Aimia
Assuming the 90 days trading horizon Dorel Industries is expected to generate 1.36 times more return on investment than Aimia. However, Dorel Industries is 1.36 times more volatile than Aimia Inc. It trades about -0.01 of its potential returns per unit of risk. Aimia Inc is currently generating about -0.02 per unit of risk. If you would invest 582.00 in Dorel Industries on August 26, 2024 and sell it today you would lose (180.00) from holding Dorel Industries or give up 30.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dorel Industries vs. Aimia Inc
Performance |
| Timeline |
| Dorel Industries |
| Aimia Inc |
Dorel Industries and Aimia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dorel Industries and Aimia
The main advantage of trading using opposite Dorel Industries and Aimia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dorel Industries position performs unexpectedly, Aimia 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 Aimia will offset losses from the drop in Aimia's long position.| Dorel Industries vs. Transcontinental | Dorel Industries vs. Gildan Activewear | Dorel Industries vs. Cogeco Communications | Dorel Industries vs. High Liner Foods |
| 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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