Correlation Between Aurora Innovation and Freedom Holdings
Can any of the company-specific risk be diversified away by investing in both Aurora Innovation and Freedom Holdings 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 Freedom Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aurora Innovation and Freedom Holdings, you can compare the effects of market volatilities on Aurora Innovation and Freedom Holdings 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 Freedom Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurora Innovation and Freedom Holdings.
Diversification Opportunities for Aurora Innovation and Freedom Holdings
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Aurora and Freedom is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Innovation and Freedom Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freedom Holdings 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 Freedom Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freedom Holdings has no effect on the direction of Aurora Innovation i.e., Aurora Innovation and Freedom Holdings go up and down completely randomly.
Pair Corralation between Aurora Innovation and Freedom Holdings
Considering the 90-day investment horizon Aurora Innovation is expected to generate 9.19 times less return on investment than Freedom Holdings. But when comparing it to its historical volatility, Aurora Innovation is 3.68 times less risky than Freedom Holdings. It trades about 0.07 of its potential returns per unit of risk. Freedom Holdings is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 14.00 in Freedom Holdings on December 1, 2024 and sell it today you would earn a total of 13.00 from holding Freedom Holdings or generate 92.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aurora Innovation vs. Freedom Holdings
Performance |
| Timeline |
| Aurora Innovation |
| Freedom Holdings |
Aurora Innovation and Freedom Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aurora Innovation and Freedom Holdings
The main advantage of trading using opposite Aurora Innovation and Freedom Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aurora Innovation position performs unexpectedly, Freedom Holdings 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 Freedom Holdings will offset losses from the drop in Freedom Holdings' long position.| Aurora Innovation vs. Magic Empire Global | Aurora Innovation vs. Zhong Yang Financial | Aurora Innovation vs. Netcapital | Aurora Innovation vs. Lazard |
| Freedom Holdings vs. RTL Group SA | Freedom Holdings vs. ITV plc | Freedom Holdings vs. ITV PLC ADR | Freedom Holdings vs. iHeartMedia |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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