Correlation Between AJ Bell and Aurora Investment
Can any of the company-specific risk be diversified away by investing in both AJ Bell 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 AJ Bell and Aurora Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AJ Bell plc and Aurora Investment Trust, you can compare the effects of market volatilities on AJ Bell 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 AJ Bell with a short position of Aurora Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of AJ Bell and Aurora Investment.
Diversification Opportunities for AJ Bell and Aurora Investment
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between AJB and Aurora is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding AJ Bell plc 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 AJ Bell 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 AJ Bell plc 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 AJ Bell i.e., AJ Bell and Aurora Investment go up and down completely randomly.
Pair Corralation between AJ Bell and Aurora Investment
Assuming the 90 days trading horizon AJ Bell plc is expected to generate 1.68 times more return on investment than Aurora Investment. However, AJ Bell is 1.68 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 0.03 per unit of risk. If you would invest 34,024 in AJ Bell plc on August 29, 2024 and sell it today you would earn a total of 12,276 from holding AJ Bell plc or generate 36.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AJ Bell plc vs. Aurora Investment Trust
Performance |
| Timeline |
| AJ Bell plc |
| Aurora Investment Trust |
AJ Bell and Aurora Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AJ Bell and Aurora Investment
The main advantage of trading using opposite AJ Bell and Aurora Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AJ Bell 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.| AJ Bell vs. Bisichi Mining PLC | AJ Bell vs. Lundin Mining Corp | AJ Bell vs. Neometals | AJ Bell vs. Universal Health Services |
| Aurora Investment vs. Catalyst Media Group | Aurora Investment vs. Oncimmune Holdings plc | Aurora Investment vs. Invesco Health Care | Aurora Investment vs. Coor Service Management |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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