Correlation Between Aurora Investment and American Homes
Can any of the company-specific risk be diversified away by investing in both Aurora Investment and American Homes 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 Aurora Investment and American Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aurora Investment Trust and American Homes 4, you can compare the effects of market volatilities on Aurora Investment and American Homes 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 Aurora Investment with a short position of American Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurora Investment and American Homes.
Diversification Opportunities for Aurora Investment and American Homes
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Aurora and American is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Investment Trust and American Homes 4 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Homes 4 and Aurora Investment 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 Aurora Investment Trust are associated (or correlated) with American Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Homes 4 has no effect on the direction of Aurora Investment i.e., Aurora Investment and American Homes go up and down completely randomly.
Pair Corralation between Aurora Investment and American Homes
Assuming the 90 days trading horizon Aurora Investment Trust is expected to generate 0.78 times more return on investment than American Homes. However, Aurora Investment Trust is 1.28 times less risky than American Homes. It trades about 0.16 of its potential returns per unit of risk. American Homes 4 is currently generating about -0.04 per unit of risk. If you would invest 23,300 in Aurora Investment Trust on November 29, 2024 and sell it today you would earn a total of 700.00 from holding Aurora Investment Trust or generate 3.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Aurora Investment Trust vs. American Homes 4
Performance |
| Timeline |
| Aurora Investment Trust |
| American Homes 4 |
Aurora Investment and American Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aurora Investment and American Homes
The main advantage of trading using opposite Aurora Investment and American Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aurora Investment position performs unexpectedly, American Homes 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 American Homes will offset losses from the drop in American Homes' long position.| Aurora Investment vs. Power Metal Resources | Aurora Investment vs. Monster Beverage Corp | Aurora Investment vs. Fulcrum Metals PLC | Aurora Investment vs. Future Metals NL |
| American Homes vs. Fevertree Drinks Plc | American Homes vs. Martin Marietta Materials | American Homes vs. Tatton Asset Management | American Homes vs. Vulcan Materials Co |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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