Correlation Between Aurora Royalties and Medical Facilities
Can any of the company-specific risk be diversified away by investing in both Aurora Royalties and Medical Facilities 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 Royalties and Medical Facilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aurora Royalties and Medical Facilities, you can compare the effects of market volatilities on Aurora Royalties and Medical Facilities 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 Royalties with a short position of Medical Facilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurora Royalties and Medical Facilities.
Diversification Opportunities for Aurora Royalties and Medical Facilities
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Aurora and Medical is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Royalties and Medical Facilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medical Facilities and Aurora Royalties 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 Royalties are associated (or correlated) with Medical Facilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medical Facilities has no effect on the direction of Aurora Royalties i.e., Aurora Royalties and Medical Facilities go up and down completely randomly.
Pair Corralation between Aurora Royalties and Medical Facilities
Assuming the 90 days trading horizon Aurora Royalties is expected to generate 3.12 times more return on investment than Medical Facilities. However, Aurora Royalties is 3.12 times more volatile than Medical Facilities. It trades about 0.21 of its potential returns per unit of risk. Medical Facilities is currently generating about 0.13 per unit of risk. If you would invest 1.50 in Aurora Royalties on September 12, 2024 and sell it today you would earn a total of 0.50 from holding Aurora Royalties or generate 33.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aurora Royalties vs. Medical Facilities
Performance |
| Timeline |
| Aurora Royalties |
| Medical Facilities |
Aurora Royalties and Medical Facilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aurora Royalties and Medical Facilities
The main advantage of trading using opposite Aurora Royalties and Medical Facilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aurora Royalties position performs unexpectedly, Medical Facilities 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 Medical Facilities will offset losses from the drop in Medical Facilities' long position.| Aurora Royalties vs. Ressources Minieres Radisson | Aurora Royalties vs. Galantas Gold Corp | Aurora Royalties vs. Red Pine Exploration | Aurora Royalties vs. Kore Mining |
| Medical Facilities vs. Premium Income | Medical Facilities vs. E L Financial Corp | Medical Facilities vs. Fairfax Financial Holdings | Medical Facilities vs. Fairfax Fin Hld |
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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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