Correlation Between METALL ZUG and Aurora Investment
Can any of the company-specific risk be diversified away by investing in both METALL ZUG and Aurora Investment 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 METALL ZUG and Aurora Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between METALL ZUG AG and Aurora Investment Trust, you can compare the effects of market volatilities on METALL ZUG and Aurora Investment 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 METALL ZUG with a short position of Aurora Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of METALL ZUG and Aurora Investment.
Diversification Opportunities for METALL ZUG and Aurora Investment
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between METALL and Aurora is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding METALL ZUG AG and Aurora Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora Investment Trust and METALL ZUG 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 METALL ZUG AG are associated (or correlated) with Aurora Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurora Investment Trust has no effect on the direction of METALL ZUG i.e., METALL ZUG and Aurora Investment go up and down completely randomly.
Pair Corralation between METALL ZUG and Aurora Investment
Assuming the 90 days trading horizon METALL ZUG AG is expected to generate 1.23 times more return on investment than Aurora Investment. However, METALL ZUG is 1.23 times more volatile than Aurora Investment Trust. It trades about -0.04 of its potential returns per unit of risk. Aurora Investment Trust is currently generating about -0.08 per unit of risk. If you would invest 116,000 in METALL ZUG AG on September 13, 2024 and sell it today you would lose (1,500) from holding METALL ZUG AG or give up 1.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
METALL ZUG AG vs. Aurora Investment Trust
Performance |
| Timeline |
| METALL ZUG AG |
| Aurora Investment Trust |
METALL ZUG and Aurora Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with METALL ZUG and Aurora Investment
The main advantage of trading using opposite METALL ZUG and Aurora Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if METALL ZUG position performs unexpectedly, Aurora Investment 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 Aurora Investment will offset losses from the drop in Aurora Investment's long position.| METALL ZUG vs. Symphony Environmental Technologies | METALL ZUG vs. Alaska Air Group | METALL ZUG vs. Bloomsbury Publishing Plc | METALL ZUG vs. Porvair plc |
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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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