Correlation Between Aurora Innovation and Barnes
Can any of the company-specific risk be diversified away by investing in both Aurora Innovation and Barnes 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 Barnes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aurora Innovation and Barnes Group, you can compare the effects of market volatilities on Aurora Innovation and Barnes 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 Barnes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurora Innovation and Barnes.
Diversification Opportunities for Aurora Innovation and Barnes
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aurora and Barnes is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Innovation and Barnes Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barnes Group 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 Barnes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barnes Group has no effect on the direction of Aurora Innovation i.e., Aurora Innovation and Barnes go up and down completely randomly.
Pair Corralation between Aurora Innovation and Barnes
Considering the 90-day investment horizon Aurora Innovation is expected to generate 2.8 times more return on investment than Barnes. However, Aurora Innovation is 2.8 times more volatile than Barnes Group. It trades about 0.09 of its potential returns per unit of risk. Barnes Group is currently generating about 0.11 per unit of risk. If you would invest 263.00 in Aurora Innovation on September 2, 2024 and sell it today you would earn a total of 384.00 from holding Aurora Innovation or generate 146.01% 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. Barnes Group
Performance |
| Timeline |
| Aurora Innovation |
| Barnes Group |
Aurora Innovation and Barnes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aurora Innovation and Barnes
The main advantage of trading using opposite Aurora Innovation and Barnes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aurora Innovation position performs unexpectedly, Barnes 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 Barnes will offset losses from the drop in Barnes' long position.| Aurora Innovation vs. Innodata | Aurora Innovation vs. International Business Machines | Aurora Innovation vs. BigBearai Holdings | Aurora Innovation vs. CLPS Inc |
| Barnes vs. Helios Technologies | Barnes vs. Enpro Industries | Barnes vs. Omega Flex | Barnes vs. Luxfer Holdings PLC |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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