Correlation Between Aurora Innovation and Blue Owl
Can any of the company-specific risk be diversified away by investing in both Aurora Innovation and Blue Owl 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 Blue Owl into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aurora Innovation and Blue Owl Capital, you can compare the effects of market volatilities on Aurora Innovation and Blue Owl 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 Blue Owl. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurora Innovation and Blue Owl.
Diversification Opportunities for Aurora Innovation and Blue Owl
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Aurora and Blue is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Innovation and Blue Owl Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Owl Capital 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 Blue Owl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Owl Capital has no effect on the direction of Aurora Innovation i.e., Aurora Innovation and Blue Owl go up and down completely randomly.
Pair Corralation between Aurora Innovation and Blue Owl
Assuming the 90 days horizon Aurora Innovation is expected to generate 13.74 times more return on investment than Blue Owl. However, Aurora Innovation is 13.74 times more volatile than Blue Owl Capital. It trades about 0.11 of its potential returns per unit of risk. Blue Owl Capital is currently generating about 0.08 per unit of risk. If you would invest 28.00 in Aurora Innovation on September 1, 2024 and sell it today you would earn a total of 82.00 from holding Aurora Innovation or generate 292.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aurora Innovation vs. Blue Owl Capital
Performance |
| Timeline |
| Aurora Innovation |
| Blue Owl Capital |
Aurora Innovation and Blue Owl Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aurora Innovation and Blue Owl
The main advantage of trading using opposite Aurora Innovation and Blue Owl positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aurora Innovation position performs unexpectedly, Blue Owl 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 Blue Owl will offset losses from the drop in Blue Owl's long position.The idea behind Aurora Innovation and Blue Owl Capital 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.| Blue Owl vs. HUTCHMED DRC | Blue Owl vs. RadNet Inc | Blue Owl vs. Four Seasons Education | Blue Owl vs. 51Talk Online Education |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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