Correlation Between Highland Funds and Aimia

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

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

Diversification Opportunities for Highland Funds and Aimia

-0.1

Correlation Coefficient

Highland Funds  Aimia

Good diversification

The 3 months correlation between Highland and Aimia is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Highland Funds I and Aimia Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aimia Inc and Highland Funds 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 Highland Funds I 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 Highland Funds i.e., Highland Funds and Aimia go up and down completely randomly.

Pair Corralation between Highland Funds and Aimia

Assuming the 90 days trading horizon Highland Funds I is expected to generate 0.45 times more return on investment than Aimia. However, Highland Funds I is 2.23 times less risky than Aimia. It trades about -0.06 of its potential returns per unit of risk. Aimia Inc is currently generating about -0.07 per unit of risk. If you would invest  1,719  in Highland Funds I on October 11, 2024 and sell it today you would lose (26.00) from holding Highland Funds I or give up 1.51% of portfolio value over 90 days.

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

Highland Funds I  vs.  Aimia Inc

Highland Funds I

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Highland Funds I has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Preferred Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Aimia Inc

Risk-Adjusted Performance

1 of 100

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. Despite nearly stable technical and fundamental indicators, Aimia is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Highland Funds and Aimia

The main advantage of trading using opposite Highland Funds and Aimia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highland Funds 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 Highland Funds I 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.