Correlation Between AURO and Highstreet
Can any of the company-specific risk be diversified away by investing in both AURO and Highstreet 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 AURO and Highstreet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AURO and Highstreet, you can compare the effects of market volatilities on AURO and Highstreet 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 AURO with a short position of Highstreet. Check out your portfolio center. Please also check ongoing floating volatility patterns of AURO and Highstreet.
Diversification Opportunities for AURO and Highstreet
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between AURO and Highstreet is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding AURO and Highstreet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highstreet and AURO 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 AURO are associated (or correlated) with Highstreet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highstreet has no effect on the direction of AURO i.e., AURO and Highstreet go up and down completely randomly.
Pair Corralation between AURO and Highstreet
Assuming the 90 days trading horizon AURO is expected to generate 0.38 times more return on investment than Highstreet. However, AURO is 2.63 times less risky than Highstreet. It trades about 0.06 of its potential returns per unit of risk. Highstreet is currently generating about -0.04 per unit of risk. If you would invest 0.02 in AURO on August 28, 2024 and sell it today you would earn a total of 0.00 from holding AURO or generate 24.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AURO vs. Highstreet
Performance |
| Timeline |
| AURO |
| Highstreet |
AURO and Highstreet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AURO and Highstreet
The main advantage of trading using opposite AURO and Highstreet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AURO position performs unexpectedly, Highstreet 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 Highstreet will offset losses from the drop in Highstreet's long position.The idea behind AURO and Highstreet pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency |