Correlation Between Aurora Innovation and RF Acquisition
Can any of the company-specific risk be diversified away by investing in both Aurora Innovation and RF Acquisition 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 RF Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aurora Innovation and RF Acquisition Corp, you can compare the effects of market volatilities on Aurora Innovation and RF Acquisition 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 RF Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurora Innovation and RF Acquisition.
Diversification Opportunities for Aurora Innovation and RF Acquisition
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Aurora and RFAC is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Innovation and RF Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RF Acquisition 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 RF Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RF Acquisition Corp has no effect on the direction of Aurora Innovation i.e., Aurora Innovation and RF Acquisition go up and down completely randomly.
Pair Corralation between Aurora Innovation and RF Acquisition
Assuming the 90 days horizon Aurora Innovation is expected to generate 53.38 times more return on investment than RF Acquisition. However, Aurora Innovation is 53.38 times more volatile than RF Acquisition Corp. It trades about 0.08 of its potential returns per unit of risk. RF Acquisition Corp is currently generating about 0.13 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 | Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
Aurora Innovation vs. RF Acquisition Corp
Performance |
| Timeline |
| Aurora Innovation |
| RF Acquisition Corp |
Aurora Innovation and RF Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aurora Innovation and RF Acquisition
The main advantage of trading using opposite Aurora Innovation and RF Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aurora Innovation position performs unexpectedly, RF Acquisition 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 RF Acquisition will offset losses from the drop in RF Acquisition's long position.The idea behind Aurora Innovation and RF Acquisition 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.| RF Acquisition vs. Qomolangma Acquisition Corp | RF Acquisition vs. Manaris Corp | RF Acquisition vs. Alpha One |
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.
Other Complementary Tools
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum |