Correlation Between Aurora Investment and LBG Media
Can any of the company-specific risk be diversified away by investing in both Aurora Investment and LBG Media 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 LBG Media 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 LBG Media PLC, you can compare the effects of market volatilities on Aurora Investment and LBG Media 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 LBG Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurora Investment and LBG Media.
Diversification Opportunities for Aurora Investment and LBG Media
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aurora and LBG is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Investment Trust and LBG Media PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LBG Media PLC 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 LBG Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LBG Media PLC has no effect on the direction of Aurora Investment i.e., Aurora Investment and LBG Media go up and down completely randomly.
Pair Corralation between Aurora Investment and LBG Media
Assuming the 90 days trading horizon Aurora Investment Trust is expected to generate 0.5 times more return on investment than LBG Media. However, Aurora Investment Trust is 2.02 times less risky than LBG Media. It trades about -0.08 of its potential returns per unit of risk. LBG Media PLC is currently generating about -0.06 per unit of risk. If you would invest 23,250 in Aurora Investment Trust on September 14, 2024 and sell it today you would lose (450.00) from holding Aurora Investment Trust or give up 1.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aurora Investment Trust vs. LBG Media PLC
Performance |
| Timeline |
| Aurora Investment Trust |
| LBG Media PLC |
Aurora Investment and LBG Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aurora Investment and LBG Media
The main advantage of trading using opposite Aurora Investment and LBG Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aurora Investment position performs unexpectedly, LBG Media 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 LBG Media will offset losses from the drop in LBG Media's long position.| Aurora Investment vs. Catalyst Media Group | Aurora Investment vs. CATLIN GROUP | Aurora Investment vs. Tamburi Investment Partners | Aurora Investment vs. Magnora ASA |
| LBG Media vs. Aurora Investment Trust | LBG Media vs. Spirent Communications plc | LBG Media vs. FC Investment Trust | LBG Media vs. Team Internet Group |
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 CEOs Directory module to screen CEOs from public companies around the world.
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