Correlation Between Aurora Innovation and Nova Vision
Can any of the company-specific risk be diversified away by investing in both Aurora Innovation and Nova Vision 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 Nova Vision into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aurora Innovation and Nova Vision Acquisition, you can compare the effects of market volatilities on Aurora Innovation and Nova Vision 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 Nova Vision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurora Innovation and Nova Vision.
Diversification Opportunities for Aurora Innovation and Nova Vision
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aurora and Nova is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Innovation and Nova Vision Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nova Vision Acquisition 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 Nova Vision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nova Vision Acquisition has no effect on the direction of Aurora Innovation i.e., Aurora Innovation and Nova Vision go up and down completely randomly.
Pair Corralation between Aurora Innovation and Nova Vision
Assuming the 90 days horizon Aurora Innovation is expected to generate 1.04 times more return on investment than Nova Vision. However, Aurora Innovation is 1.04 times more volatile than Nova Vision Acquisition. It trades about 0.08 of its potential returns per unit of risk. Nova Vision Acquisition is currently generating about 0.06 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 | Significant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Aurora Innovation vs. Nova Vision Acquisition
Performance |
| Timeline |
| Aurora Innovation |
| Nova Vision Acquisition |
Aurora Innovation and Nova Vision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aurora Innovation and Nova Vision
The main advantage of trading using opposite Aurora Innovation and Nova Vision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aurora Innovation position performs unexpectedly, Nova Vision 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 Nova Vision will offset losses from the drop in Nova Vision's long position.The idea behind Aurora Innovation and Nova Vision Acquisition 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.| Nova Vision vs. PowerUp Acquisition Corp | Nova Vision vs. HUMANA INC | Nova Vision vs. Aquagold International | Nova Vision vs. Barloworld Ltd ADR |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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