Correlation Between Aurora Innovation and TMT Acquisition
Can any of the company-specific risk be diversified away by investing in both Aurora Innovation and TMT 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 TMT 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 TMT Acquisition Corp, you can compare the effects of market volatilities on Aurora Innovation and TMT 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 TMT Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurora Innovation and TMT Acquisition.
Diversification Opportunities for Aurora Innovation and TMT Acquisition
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Aurora and TMT is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Innovation and TMT Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TMT 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 TMT Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TMT Acquisition Corp has no effect on the direction of Aurora Innovation i.e., Aurora Innovation and TMT Acquisition go up and down completely randomly.
Pair Corralation between Aurora Innovation and TMT Acquisition
Assuming the 90 days horizon Aurora Innovation is expected to generate 2.73 times more return on investment than TMT Acquisition. However, Aurora Innovation is 2.73 times more volatile than TMT Acquisition Corp. It trades about 0.08 of its potential returns per unit of risk. TMT Acquisition Corp is currently generating about -0.05 per unit of risk. If you would invest 23.00 in Aurora Innovation on August 30, 2024 and sell it today you would earn a total of 92.00 from holding Aurora Innovation or generate 400.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 84.88% |
| Values | Daily Returns |
Aurora Innovation vs. TMT Acquisition Corp
Performance |
| Timeline |
| Aurora Innovation |
| TMT Acquisition Corp |
Aurora Innovation and TMT Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aurora Innovation and TMT Acquisition
The main advantage of trading using opposite Aurora Innovation and TMT Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aurora Innovation position performs unexpectedly, TMT 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 TMT Acquisition will offset losses from the drop in TMT Acquisition's long position.The idea behind Aurora Innovation and TMT 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.| TMT Acquisition vs. Skechers USA | TMT Acquisition vs. Mannatech Incorporated | TMT Acquisition vs. Capital Clean Energy | TMT Acquisition vs. BW Offshore Limited |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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