Correlation Between Sixth Street and Aimia

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

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

Diversification Opportunities for Sixth Street and Aimia

0.21

Correlation Coefficient

Sixth Street  Aimia

Modest diversification

The 3 months correlation between Sixth and Aimia is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Sixth Street Specialty and Aimia Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aimia Inc and Sixth Street 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 Sixth Street Specialty 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 Sixth Street i.e., Sixth Street and Aimia go up and down completely randomly.

Pair Corralation between Sixth Street and Aimia

Given the investment horizon of 90 days Sixth Street Specialty is expected to generate 0.28 times more return on investment than Aimia. However, Sixth Street Specialty is 3.58 times less risky than Aimia. It trades about 0.03 of its potential returns per unit of risk. Aimia Inc is currently generating about -0.07 per unit of risk. If you would invest  2,101  in Sixth Street Specialty on October 10, 2024 and sell it today you would earn a total of  7.00  from holding Sixth Street Specialty or generate 0.33% return on investment over 90 days.

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

Sixth Street Specialty  vs.  Aimia Inc

Sixth Street Specialty

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sixth Street Specialty are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong essential indicators, Sixth Street is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the 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 Sixth Street and Aimia

The main advantage of trading using opposite Sixth Street and Aimia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sixth Street 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 Sixth Street Specialty 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.