Correlation Between Capital Metals and Aurora Investment
Can any of the company-specific risk be diversified away by investing in both Capital Metals 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 Capital Metals and Aurora Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital Metals PLC and Aurora Investment Trust, you can compare the effects of market volatilities on Capital Metals 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 Capital Metals with a short position of Aurora Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Metals and Aurora Investment.
Diversification Opportunities for Capital Metals and Aurora Investment
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Capital and Aurora is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Capital Metals PLC 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 Capital Metals 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 Capital Metals PLC 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 Capital Metals i.e., Capital Metals and Aurora Investment go up and down completely randomly.
Pair Corralation between Capital Metals and Aurora Investment
Assuming the 90 days trading horizon Capital Metals PLC is expected to under-perform the Aurora Investment. In addition to that, Capital Metals is 5.44 times more volatile than Aurora Investment Trust. It trades about -0.02 of its total potential returns per unit of risk. Aurora Investment Trust is currently generating about 0.05 per unit of volatility. If you would invest 20,456 in Aurora Investment Trust on December 3, 2024 and sell it today you would earn a total of 3,644 from holding Aurora Investment Trust or generate 17.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.7% |
| Values | Daily Returns |
Capital Metals PLC vs. Aurora Investment Trust
Performance |
| Timeline |
| Capital Metals PLC |
| Aurora Investment Trust |
Capital Metals and Aurora Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital Metals and Aurora Investment
The main advantage of trading using opposite Capital Metals and Aurora Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Metals 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.| Capital Metals vs. OneSavings Bank PLC | Capital Metals vs. Beeks Trading | Capital Metals vs. Axfood AB | Capital Metals vs. Scandinavian Tobacco Group |
| Aurora Investment vs. MTI Wireless Edge | Aurora Investment vs. Kinnevik Investment AB | Aurora Investment vs. Aeorema Communications Plc | Aurora Investment vs. Vietnam Enterprise Investments |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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