Correlation Between Aurora Innovation and Applied Blockchain
Can any of the company-specific risk be diversified away by investing in both Aurora Innovation and Applied Blockchain 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 Innovation and Applied Blockchain into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aurora Innovation and Applied Blockchain, you can compare the effects of market volatilities on Aurora Innovation and Applied Blockchain 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 Innovation with a short position of Applied Blockchain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurora Innovation and Applied Blockchain.
Diversification Opportunities for Aurora Innovation and Applied Blockchain
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aurora and Applied is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Innovation and Applied Blockchain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Blockchain and Aurora Innovation 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 Innovation are associated (or correlated) with Applied Blockchain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Blockchain has no effect on the direction of Aurora Innovation i.e., Aurora Innovation and Applied Blockchain go up and down completely randomly.
Pair Corralation between Aurora Innovation and Applied Blockchain
Considering the 90-day investment horizon Aurora Innovation is expected to generate 1.16 times less return on investment than Applied Blockchain. But when comparing it to its historical volatility, Aurora Innovation is 1.44 times less risky than Applied Blockchain. It trades about 0.09 of its potential returns per unit of risk. Applied Blockchain is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 192.00 in Applied Blockchain on September 12, 2024 and sell it today you would earn a total of 702.00 from holding Applied Blockchain or generate 365.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aurora Innovation vs. Applied Blockchain
Performance |
| Timeline |
| Aurora Innovation |
| Applied Blockchain |
Aurora Innovation and Applied Blockchain Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aurora Innovation and Applied Blockchain
The main advantage of trading using opposite Aurora Innovation and Applied Blockchain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aurora Innovation position performs unexpectedly, Applied Blockchain 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 Applied Blockchain will offset losses from the drop in Applied Blockchain's long position.| Aurora Innovation vs. FiscalNote Holdings | Aurora Innovation vs. Innodata | Aurora Innovation vs. International Business Machines | Aurora Innovation vs. BigBearai Holdings |
| Applied Blockchain vs. Magic Empire Global | Applied Blockchain vs. Zhong Yang Financial | Applied Blockchain vs. Netcapital | Applied Blockchain vs. Lazard |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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