Correlation Between Aurora Innovation and Rand Capital
Can any of the company-specific risk be diversified away by investing in both Aurora Innovation and Rand Capital 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 Rand Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aurora Innovation and Rand Capital Corp, you can compare the effects of market volatilities on Aurora Innovation and Rand Capital 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 Rand Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurora Innovation and Rand Capital.
Diversification Opportunities for Aurora Innovation and Rand Capital
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Aurora and Rand is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Innovation and Rand Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rand Capital Corp 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 Rand Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rand Capital Corp has no effect on the direction of Aurora Innovation i.e., Aurora Innovation and Rand Capital go up and down completely randomly.
Pair Corralation between Aurora Innovation and Rand Capital
Assuming the 90 days horizon Aurora Innovation is expected to generate 18.76 times more return on investment than Rand Capital. However, Aurora Innovation is 18.76 times more volatile than Rand Capital Corp. It trades about 0.1 of its potential returns per unit of risk. Rand Capital Corp is currently generating about 0.18 per unit of risk. If you would invest 106.00 in Aurora Innovation on August 31, 2024 and sell it today you would earn a total of 9.00 from holding Aurora Innovation or generate 8.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Aurora Innovation vs. Rand Capital Corp
Performance |
| Timeline |
| Aurora Innovation |
| Rand Capital Corp |
Aurora Innovation and Rand Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aurora Innovation and Rand Capital
The main advantage of trading using opposite Aurora Innovation and Rand Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aurora Innovation position performs unexpectedly, Rand Capital 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 Rand Capital will offset losses from the drop in Rand Capital's long position.The idea behind Aurora Innovation and Rand Capital Corp 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.| Rand Capital vs. Blackstone Gso Long | Rand Capital vs. First Trust Senior | Rand Capital vs. Eaton Vance Senior | Rand Capital vs. Princeton Capital |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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