Correlation Between Aimia and Tamarack Valley

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Can any of the company-specific risk be diversified away by investing in both Aimia and Tamarack Valley 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 Tamarack Valley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aimia Inc and Tamarack Valley Energy, you can compare the effects of market volatilities on Aimia and Tamarack Valley 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 Tamarack Valley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aimia and Tamarack Valley.

Diversification Opportunities for Aimia and Tamarack Valley

-0.4
  Correlation Coefficient

Very good diversification

The 3 months correlation between Aimia and Tamarack is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Aimia Inc and Tamarack Valley Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tamarack Valley Energy 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 Tamarack Valley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tamarack Valley Energy has no effect on the direction of Aimia i.e., Aimia and Tamarack Valley go up and down completely randomly.

Pair Corralation between Aimia and Tamarack Valley

Assuming the 90 days trading horizon Aimia is expected to generate 7.6 times less return on investment than Tamarack Valley. But when comparing it to its historical volatility, Aimia Inc is 1.24 times less risky than Tamarack Valley. It trades about 0.02 of its potential returns per unit of risk. Tamarack Valley Energy is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  381.00  in Tamarack Valley Energy on September 3, 2024 and sell it today you would earn a total of  65.00  from holding Tamarack Valley Energy or generate 17.06% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Aimia Inc  vs.  Tamarack Valley Energy

 Performance 
       Timeline  
Aimia Inc 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Aimia Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, Aimia is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.
Tamarack Valley Energy 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Tamarack Valley Energy are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Tamarack Valley displayed solid returns over the last few months and may actually be approaching a breakup point.

Aimia and Tamarack Valley Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Aimia and Tamarack Valley

The main advantage of trading using opposite Aimia and Tamarack Valley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aimia position performs unexpectedly, Tamarack Valley 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 Tamarack Valley will offset losses from the drop in Tamarack Valley's long position.
The idea behind Aimia Inc and Tamarack Valley Energy pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.

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