Correlation Between Aura Investments and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Aura Investments and Dow Jones 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 Aura Investments and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aura Investments and Dow Jones Industrial, you can compare the effects of market volatilities on Aura Investments and Dow Jones 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 Aura Investments with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aura Investments and Dow Jones.
Diversification Opportunities for Aura Investments and Dow Jones
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aura and Dow is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Aura Investments and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Aura Investments 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 Aura Investments are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Aura Investments i.e., Aura Investments and Dow Jones go up and down completely randomly.
Pair Corralation between Aura Investments and Dow Jones
Assuming the 90 days trading horizon Aura Investments is expected to generate 3.6 times more return on investment than Dow Jones. However, Aura Investments is 3.6 times more volatile than Dow Jones Industrial. It trades about 0.16 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.13 per unit of risk. If you would invest 92,641 in Aura Investments on August 29, 2024 and sell it today you would earn a total of 93,059 from holding Aura Investments or generate 100.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 76.71% |
| Values | Daily Returns |
Aura Investments vs. Dow Jones Industrial
Performance |
| Timeline |
Aura Investments and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Aura Investments
Pair trading matchups for Aura Investments
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Aura Investments and Dow Jones
The main advantage of trading using opposite Aura Investments and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aura Investments position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Aura Investments vs. Israel Canada | Aura Investments vs. Azrieli Group | Aura Investments vs. Delek Group | Aura Investments vs. Israel Discount Bank |
| Dow Jones vs. Kaltura | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. US Global Investors | Dow Jones vs. Analog Devices |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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