Correlation Between BBX Capital and Aimia

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

By analyzing existing cross correlation between BBX Capital and Aimia Inc, you can compare the effects of market volatilities on BBX Capital 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 BBX Capital with a short position of Aimia. Check out your portfolio center. Please also check ongoing floating volatility patterns of BBX Capital and Aimia.

Diversification Opportunities for BBX Capital and Aimia

0.75

Correlation Coefficient

BBX Capital  Aimia

Poor diversification

The 3 months correlation between BBX and Aimia is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding BBX Capital and Aimia Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aimia Inc and BBX Capital 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 BBX Capital 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 BBX Capital i.e., BBX Capital and Aimia go up and down completely randomly.

Pair Corralation between BBX Capital and Aimia

Assuming the 90 days horizon BBX Capital is expected to generate 1.21 times more return on investment than Aimia. However, BBX Capital is 1.21 times more volatile than Aimia Inc. It trades about 0.14 of its potential returns per unit of risk. Aimia Inc is currently generating about -0.09 per unit of risk. If you would invest  660.00  in BBX Capital on November 29, 2024 and sell it today you would earn a total of  39.00  from holding BBX Capital or generate 5.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

BBX Capital  vs.  Aimia Inc

BBX Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days BBX Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

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.

Pair Trading with BBX Capital and Aimia

The main advantage of trading using opposite BBX Capital and Aimia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BBX Capital 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.

The idea behind BBX Capital and Aimia Inc 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.