Correlation Between Aurora Innovation and Argo Blockchain
Can any of the company-specific risk be diversified away by investing in both Aurora Innovation and Argo Blockchain 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 Argo Blockchain into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aurora Innovation and Argo Blockchain PLC, you can compare the effects of market volatilities on Aurora Innovation and Argo Blockchain 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 Argo Blockchain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurora Innovation and Argo Blockchain.
Diversification Opportunities for Aurora Innovation and Argo Blockchain
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Aurora and Argo is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Innovation and Argo Blockchain PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argo Blockchain 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 Argo Blockchain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Argo Blockchain PLC has no effect on the direction of Aurora Innovation i.e., Aurora Innovation and Argo Blockchain go up and down completely randomly.
Pair Corralation between Aurora Innovation and Argo Blockchain
Assuming the 90 days horizon Aurora Innovation is expected to generate 1.3 times more return on investment than Argo Blockchain. However, Aurora Innovation is 1.3 times more volatile than Argo Blockchain PLC. It trades about 0.08 of its potential returns per unit of risk. Argo Blockchain PLC is currently generating about 0.04 per unit of risk. If you would invest 31.00 in Aurora Innovation on August 31, 2024 and sell it today you would earn a total of 79.00 from holding Aurora Innovation or generate 254.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aurora Innovation vs. Argo Blockchain PLC
Performance |
| Timeline |
| Aurora Innovation |
| Argo Blockchain PLC |
Aurora Innovation and Argo Blockchain Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aurora Innovation and Argo Blockchain
The main advantage of trading using opposite Aurora Innovation and Argo Blockchain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aurora Innovation position performs unexpectedly, Argo Blockchain 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 Argo Blockchain will offset losses from the drop in Argo Blockchain's long position.The idea behind Aurora Innovation and Argo Blockchain PLC 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.| Argo Blockchain vs. Terawulf | Argo Blockchain vs. Iris Energy | Argo Blockchain vs. Stronghold Digital Mining | Argo Blockchain vs. Bitfarms |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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