Correlation Between Aurora Investment and United Utilities
Can any of the company-specific risk be diversified away by investing in both Aurora Investment and United Utilities 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 United Utilities 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 United Utilities Group, you can compare the effects of market volatilities on Aurora Investment and United Utilities 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 United Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurora Investment and United Utilities.
Diversification Opportunities for Aurora Investment and United Utilities
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Aurora and United is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Investment Trust and United Utilities Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Utilities 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 United Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Utilities has no effect on the direction of Aurora Investment i.e., Aurora Investment and United Utilities go up and down completely randomly.
Pair Corralation between Aurora Investment and United Utilities
Assuming the 90 days trading horizon Aurora Investment Trust is expected to under-perform the United Utilities. But the stock apears to be less risky and, when comparing its historical volatility, Aurora Investment Trust is 1.13 times less risky than United Utilities. The stock trades about -0.09 of its potential returns per unit of risk. The United Utilities Group is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 103,746 in United Utilities Group on September 12, 2024 and sell it today you would earn a total of 4,054 from holding United Utilities Group or generate 3.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aurora Investment Trust vs. United Utilities Group
Performance |
| Timeline |
| Aurora Investment Trust |
| United Utilities |
Aurora Investment and United Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aurora Investment and United Utilities
The main advantage of trading using opposite Aurora Investment and United Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aurora Investment position performs unexpectedly, United Utilities 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 United Utilities will offset losses from the drop in United Utilities' long position.| Aurora Investment vs. Catalyst Media Group | Aurora Investment vs. CATLIN GROUP | Aurora Investment vs. Tamburi Investment Partners | Aurora Investment vs. Magnora ASA |
| United Utilities vs. Toyota Motor Corp | United Utilities vs. SoftBank Group Corp | United Utilities vs. OTP Bank Nyrt | United Utilities vs. Hartford Financial Services |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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