Correlation Between Compute Health and Aurora Innovation
Can any of the company-specific risk be diversified away by investing in both Compute Health and Aurora Innovation 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 Compute Health and Aurora Innovation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compute Health Acquisition and Aurora Innovation, you can compare the effects of market volatilities on Compute Health and Aurora Innovation 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 Compute Health with a short position of Aurora Innovation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compute Health and Aurora Innovation.
Diversification Opportunities for Compute Health and Aurora Innovation
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Compute and Aurora is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Compute Health Acquisition and Aurora Innovation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora Innovation and Compute Health 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 Compute Health Acquisition are associated (or correlated) with Aurora Innovation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurora Innovation has no effect on the direction of Compute Health i.e., Compute Health and Aurora Innovation go up and down completely randomly.
Pair Corralation between Compute Health and Aurora Innovation
If you would invest 30.00 in Aurora Innovation on August 29, 2024 and sell it today you would earn a total of 64.00 from holding Aurora Innovation or generate 213.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 0.48% |
| Values | Daily Returns |
Compute Health Acquisition vs. Aurora Innovation
Performance |
| Timeline |
| Compute Health Acqui |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Aurora Innovation |
Compute Health and Aurora Innovation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compute Health and Aurora Innovation
The main advantage of trading using opposite Compute Health and Aurora Innovation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compute Health position performs unexpectedly, Aurora Innovation 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 Innovation will offset losses from the drop in Aurora Innovation's long position.The idea behind Compute Health Acquisition and Aurora Innovation 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.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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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