Correlation Between Ritchie Bros and Aimia
Can any of the company-specific risk be diversified away by investing in both Ritchie Bros 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 Ritchie Bros and Aimia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ritchie Bros Auctioneers and Aimia Inc, you can compare the effects of market volatilities on Ritchie Bros 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 Ritchie Bros with a short position of Aimia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ritchie Bros and Aimia.
Diversification Opportunities for Ritchie Bros and Aimia
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Ritchie and Aimia is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Ritchie Bros Auctioneers and Aimia Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aimia Inc and Ritchie Bros 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 Ritchie Bros Auctioneers 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 Ritchie Bros i.e., Ritchie Bros and Aimia go up and down completely randomly.
Pair Corralation between Ritchie Bros and Aimia
Assuming the 90 days trading horizon Ritchie Bros Auctioneers is expected to generate 0.79 times more return on investment than Aimia. However, Ritchie Bros Auctioneers is 1.27 times less risky than Aimia. It trades about 0.08 of its potential returns per unit of risk. Aimia Inc is currently generating about -0.06 per unit of risk. If you would invest 7,661 in Ritchie Bros Auctioneers on January 24, 2024 and sell it today you would earn a total of 2,329 from holding Ritchie Bros Auctioneers or generate 30.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ritchie Bros Auctioneers vs. Aimia Inc
Performance |
| Timeline |
| Ritchie Bros Auctioneers |
| Aimia Inc |
Ritchie Bros and Aimia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ritchie Bros and Aimia
The main advantage of trading using opposite Ritchie Bros and Aimia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ritchie Bros 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.| Ritchie Bros vs. Baylin Technologies | Ritchie Bros vs. Kits Eyecare | Ritchie Bros vs. Cipher Pharmaceuticals |
| Aimia vs. Canadian Imperial Bank | Aimia vs. Fairfax Financial Holdings | Aimia vs. Bank of Montreal | Aimia vs. Bank of Montreal |
Check out your portfolio center.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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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