Correlation Between Caribbean Utilities and Aurora Royalties
Can any of the company-specific risk be diversified away by investing in both Caribbean Utilities and Aurora Royalties 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 Caribbean Utilities and Aurora Royalties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caribbean Utilities and Aurora Royalties, you can compare the effects of market volatilities on Caribbean Utilities and Aurora Royalties 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 Caribbean Utilities with a short position of Aurora Royalties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caribbean Utilities and Aurora Royalties.
Diversification Opportunities for Caribbean Utilities and Aurora Royalties
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Caribbean and Aurora is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Caribbean Utilities and Aurora Royalties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora Royalties and Caribbean Utilities 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 Caribbean Utilities are associated (or correlated) with Aurora Royalties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurora Royalties has no effect on the direction of Caribbean Utilities i.e., Caribbean Utilities and Aurora Royalties go up and down completely randomly.
Pair Corralation between Caribbean Utilities and Aurora Royalties
Assuming the 90 days trading horizon Caribbean Utilities is expected to generate 47.17 times less return on investment than Aurora Royalties. But when comparing it to its historical volatility, Caribbean Utilities is 12.49 times less risky than Aurora Royalties. It trades about 0.02 of its potential returns per unit of risk. Aurora Royalties is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1.50 in Aurora Royalties on September 2, 2024 and sell it today you would earn a total of 0.50 from holding Aurora Royalties or generate 33.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
Caribbean Utilities vs. Aurora Royalties
Performance |
| Timeline |
| Caribbean Utilities |
| Aurora Royalties |
Caribbean Utilities and Aurora Royalties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caribbean Utilities and Aurora Royalties
The main advantage of trading using opposite Caribbean Utilities and Aurora Royalties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caribbean Utilities position performs unexpectedly, Aurora Royalties 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 Royalties will offset losses from the drop in Aurora Royalties' long position.| Caribbean Utilities vs. Maxim Power Corp | Caribbean Utilities vs. ATCO | Caribbean Utilities vs. Capstone Infrastructure Corp | Caribbean Utilities vs. Richards Packaging Income |
| Aurora Royalties vs. CNJ Capital Investments | Aurora Royalties vs. Costco Wholesale Corp | Aurora Royalties vs. Maple Peak Investments | Aurora Royalties vs. Arizona Metals Corp |
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 CEOs Directory module to screen CEOs from public companies around the world.
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