Correlation Between Aimia and Westwood Holdings

Can any of the company-specific risk be diversified away by investing in both Aimia and Westwood Holdings 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 Westwood Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aimia Inc and Westwood Holdings Group, you can compare the effects of market volatilities on Aimia and Westwood Holdings 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 Westwood Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aimia and Westwood Holdings.

Diversification Opportunities for Aimia and Westwood Holdings

-0.43

Correlation Coefficient

Aimia  Westwood Holdings

Very good diversification

The 3 months correlation between Aimia and Westwood is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Aimia Inc and Westwood Holdings Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westwood Holdings 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 Westwood Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westwood Holdings has no effect on the direction of Aimia i.e., Aimia and Westwood Holdings go up and down completely randomly.

Pair Corralation between Aimia and Westwood Holdings

Assuming the 90 days horizon Aimia Inc is expected to under-perform the Westwood Holdings. But the pink sheet apears to be less risky and, when comparing its historical volatility, Aimia Inc is 1.15 times less risky than Westwood Holdings. The pink sheet trades about -0.07 of its potential returns per unit of risk. The Westwood Holdings Group is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,565  in Westwood Holdings Group on November 29, 2024 and sell it today you would earn a total of  55.00  from holding Westwood Holdings Group or generate 3.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Aimia Inc  vs.  Westwood Holdings Group

Aimia Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aimia Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Westwood Holdings

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Westwood Holdings Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical indicators, Westwood Holdings is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Aimia and Westwood Holdings

The main advantage of trading using opposite Aimia and Westwood Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aimia position performs unexpectedly, Westwood Holdings 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 Westwood Holdings will offset losses from the drop in Westwood Holdings' long position.

The idea behind Aimia Inc and Westwood Holdings Group 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.