Correlation Between Richelieu Hardware and Aimia
Can any of the company-specific risk be diversified away by investing in both Richelieu Hardware 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 Richelieu Hardware and Aimia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Richelieu Hardware and Aimia Inc, you can compare the effects of market volatilities on Richelieu Hardware 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 Richelieu Hardware with a short position of Aimia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Richelieu Hardware and Aimia.
Diversification Opportunities for Richelieu Hardware and Aimia
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Richelieu and Aimia is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Richelieu Hardware and Aimia Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aimia Inc and Richelieu Hardware 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 Richelieu Hardware 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 Richelieu Hardware i.e., Richelieu Hardware and Aimia go up and down completely randomly.
Pair Corralation between Richelieu Hardware and Aimia
Assuming the 90 days trading horizon Richelieu Hardware is expected to under-perform the Aimia. But the stock apears to be less risky and, when comparing its historical volatility, Richelieu Hardware is 1.81 times less risky than Aimia. The stock trades about -0.28 of its potential returns per unit of risk. The Aimia Inc is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 237.00 in Aimia Inc on September 25, 2024 and sell it today you would earn a total of 16.00 from holding Aimia Inc or generate 6.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Richelieu Hardware vs. Aimia Inc
Performance |
| Timeline |
| Richelieu Hardware |
| Aimia Inc |
Richelieu Hardware and Aimia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Richelieu Hardware and Aimia
The main advantage of trading using opposite Richelieu Hardware and Aimia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Richelieu Hardware 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.| Richelieu Hardware vs. Stella Jones | Richelieu Hardware vs. Winpak | Richelieu Hardware vs. Stantec | Richelieu Hardware vs. Gildan Activewear |
| 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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