Correlation Between 3D Systems and Aurora Innovation
Can any of the company-specific risk be diversified away by investing in both 3D Systems 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 3D Systems and Aurora Innovation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 3D Systems and Aurora Innovation, you can compare the effects of market volatilities on 3D Systems 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 3D Systems with a short position of Aurora Innovation. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3D Systems and Aurora Innovation.
Diversification Opportunities for 3D Systems and Aurora Innovation
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DDD and Aurora is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding 3D Systems and Aurora Innovation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora Innovation and 3D Systems 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 3D Systems 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 3D Systems i.e., 3D Systems and Aurora Innovation go up and down completely randomly.
Pair Corralation between 3D Systems and Aurora Innovation
Considering the 90-day investment horizon 3D Systems is expected to generate 1.04 times less return on investment than Aurora Innovation. But when comparing it to its historical volatility, 3D Systems is 1.22 times less risky than Aurora Innovation. It trades about 0.15 of its potential returns per unit of risk. Aurora Innovation is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 426.00 in Aurora Innovation on September 2, 2024 and sell it today you would earn a total of 221.00 from holding Aurora Innovation or generate 51.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
3D Systems vs. Aurora Innovation
Performance |
| Timeline |
| 3D Systems |
| Aurora Innovation |
3D Systems and Aurora Innovation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 3D Systems and Aurora Innovation
The main advantage of trading using opposite 3D Systems and Aurora Innovation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3D Systems 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.| 3D Systems vs. Ehang Holdings | 3D Systems vs. Vislink Technologies | 3D Systems vs. Foresight Autonomous Holdings | 3D Systems vs. Aquagold International |
| Aurora Innovation vs. Innodata | Aurora Innovation vs. International Business Machines | Aurora Innovation vs. BigBearai Holdings | Aurora Innovation vs. CLPS Inc |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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