Correlation Between Aurora Innovation and Sixth Street
Can any of the company-specific risk be diversified away by investing in both Aurora Innovation and Sixth Street 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 Sixth Street into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aurora Innovation and Sixth Street Specialty, you can compare the effects of market volatilities on Aurora Innovation and Sixth Street 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 Sixth Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurora Innovation and Sixth Street.
Diversification Opportunities for Aurora Innovation and Sixth Street
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Aurora and Sixth is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Innovation and Sixth Street Specialty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sixth Street Specialty 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 Sixth Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sixth Street Specialty has no effect on the direction of Aurora Innovation i.e., Aurora Innovation and Sixth Street go up and down completely randomly.
Pair Corralation between Aurora Innovation and Sixth Street
Assuming the 90 days horizon Aurora Innovation is expected to generate 14.37 times more return on investment than Sixth Street. However, Aurora Innovation is 14.37 times more volatile than Sixth Street Specialty. It trades about 0.1 of its potential returns per unit of risk. Sixth Street Specialty is currently generating about 0.04 per unit of risk. If you would invest 80.00 in Aurora Innovation on August 25, 2024 and sell it today you would earn a total of 22.00 from holding Aurora Innovation or generate 27.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aurora Innovation vs. Sixth Street Specialty
Performance |
| Timeline |
| Aurora Innovation |
| Sixth Street Specialty |
Aurora Innovation and Sixth Street Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aurora Innovation and Sixth Street
The main advantage of trading using opposite Aurora Innovation and Sixth Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aurora Innovation position performs unexpectedly, Sixth Street 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 Sixth Street will offset losses from the drop in Sixth Street's long position.The idea behind Aurora Innovation and Sixth Street Specialty 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.| Sixth Street vs. PowerUp Acquisition Corp | Sixth Street vs. Aurora Innovation | Sixth Street vs. HUMANA INC | Sixth Street vs. Aquagold International |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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