Correlation Between Aurora Innovation and Essentra Plc
Can any of the company-specific risk be diversified away by investing in both Aurora Innovation and Essentra Plc 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 Essentra Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aurora Innovation and Essentra Plc, you can compare the effects of market volatilities on Aurora Innovation and Essentra Plc 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 Essentra Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurora Innovation and Essentra Plc.
Diversification Opportunities for Aurora Innovation and Essentra Plc
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Aurora and Essentra is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Innovation and Essentra Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Essentra Plc 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 Essentra Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Essentra Plc has no effect on the direction of Aurora Innovation i.e., Aurora Innovation and Essentra Plc go up and down completely randomly.
Pair Corralation between Aurora Innovation and Essentra Plc
Considering the 90-day investment horizon Aurora Innovation is expected to generate 2.5 times more return on investment than Essentra Plc. However, Aurora Innovation is 2.5 times more volatile than Essentra Plc. It trades about 0.09 of its potential returns per unit of risk. Essentra Plc is currently generating about 0.04 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 Against |
| Strength | Insignificant |
| Accuracy | 50.0% |
| Values | Daily Returns |
Aurora Innovation vs. Essentra Plc
Performance |
| Timeline |
| Aurora Innovation |
| Essentra Plc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Aurora Innovation and Essentra Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aurora Innovation and Essentra Plc
The main advantage of trading using opposite Aurora Innovation and Essentra Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aurora Innovation position performs unexpectedly, Essentra Plc 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 Essentra Plc will offset losses from the drop in Essentra Plc's long position.| Aurora Innovation vs. Innodata | Aurora Innovation vs. International Business Machines | Aurora Innovation vs. BigBearai Holdings | Aurora Innovation vs. CLPS Inc |
| Essentra Plc vs. LyondellBasell Industries NV | Essentra Plc vs. International Flavors Fragrances | Essentra Plc vs. Cabot | Essentra Plc vs. Westlake Chemical |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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