Correlation Between Auto Trader and Aurora Investment
Can any of the company-specific risk be diversified away by investing in both Auto Trader and Aurora Investment 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 Auto Trader and Aurora Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Auto Trader Group and Aurora Investment Trust, you can compare the effects of market volatilities on Auto Trader and Aurora Investment 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 Auto Trader with a short position of Aurora Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auto Trader and Aurora Investment.
Diversification Opportunities for Auto Trader and Aurora Investment
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Auto and Aurora is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Auto Trader Group and Aurora Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora Investment Trust and Auto Trader 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 Auto Trader Group are associated (or correlated) with Aurora Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurora Investment Trust has no effect on the direction of Auto Trader i.e., Auto Trader and Aurora Investment go up and down completely randomly.
Pair Corralation between Auto Trader and Aurora Investment
Assuming the 90 days trading horizon Auto Trader Group is expected to generate 1.67 times more return on investment than Aurora Investment. However, Auto Trader is 1.67 times more volatile than Aurora Investment Trust. It trades about 0.01 of its potential returns per unit of risk. Aurora Investment Trust is currently generating about -0.14 per unit of risk. If you would invest 83,920 in Auto Trader Group on September 1, 2024 and sell it today you would lose (20.00) from holding Auto Trader Group or give up 0.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Auto Trader Group vs. Aurora Investment Trust
Performance |
| Timeline |
| Auto Trader Group |
| Aurora Investment Trust |
Auto Trader and Aurora Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Auto Trader and Aurora Investment
The main advantage of trading using opposite Auto Trader and Aurora Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auto Trader position performs unexpectedly, Aurora Investment 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 Aurora Investment will offset losses from the drop in Aurora Investment's long position.| Auto Trader vs. Catalyst Media Group | Auto Trader vs. Tamburi Investment Partners | Auto Trader vs. Magnora ASA | Auto Trader vs. RTW Venture Fund |
| Aurora Investment vs. Toyota Motor Corp | Aurora Investment vs. SoftBank Group Corp | Aurora Investment vs. OTP Bank Nyrt | Aurora Investment vs. Las Vegas Sands |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |