Correlation Between Aurora Investment and Toyota
Can any of the company-specific risk be diversified away by investing in both Aurora Investment and Toyota 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 Toyota 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 Toyota Motor Corp, you can compare the effects of market volatilities on Aurora Investment and Toyota 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 Toyota. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurora Investment and Toyota.
Diversification Opportunities for Aurora Investment and Toyota
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Aurora and Toyota is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Investment Trust and Toyota Motor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toyota Motor Corp 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 Toyota. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toyota Motor Corp has no effect on the direction of Aurora Investment i.e., Aurora Investment and Toyota go up and down completely randomly.
Pair Corralation between Aurora Investment and Toyota
Assuming the 90 days trading horizon Aurora Investment is expected to generate 2.65 times less return on investment than Toyota. But when comparing it to its historical volatility, Aurora Investment Trust is 1.95 times less risky than Toyota. It trades about 0.03 of its potential returns per unit of risk. Toyota Motor Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 186,965 in Toyota Motor Corp on September 3, 2024 and sell it today you would earn a total of 68,185 from holding Toyota Motor Corp or generate 36.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.39% |
| Values | Daily Returns |
Aurora Investment Trust vs. Toyota Motor Corp
Performance |
| Timeline |
| Aurora Investment Trust |
| Toyota Motor Corp |
Aurora Investment and Toyota Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aurora Investment and Toyota
The main advantage of trading using opposite Aurora Investment and Toyota positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aurora Investment position performs unexpectedly, Toyota 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 Toyota will offset losses from the drop in Toyota's long position.| Aurora Investment vs. Qurate Retail Series | Aurora Investment vs. Lundin Mining Corp | Aurora Investment vs. Gamma Communications PLC | Aurora Investment vs. Southern Copper Corp |
| Toyota vs. Cincinnati Financial Corp | Toyota vs. Ally Financial | Toyota vs. Beowulf Mining | Toyota vs. Coeur Mining |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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