Correlation Between GM and Aurora Technology
Can any of the company-specific risk be diversified away by investing in both GM and Aurora Technology 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 GM and Aurora Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Aurora Technology Acquisition, you can compare the effects of market volatilities on GM and Aurora Technology 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 GM with a short position of Aurora Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Aurora Technology.
Diversification Opportunities for GM and Aurora Technology
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and Aurora is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Aurora Technology Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora Technology and GM 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 General Motors are associated (or correlated) with Aurora Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurora Technology has no effect on the direction of GM i.e., GM and Aurora Technology go up and down completely randomly.
Pair Corralation between GM and Aurora Technology
Allowing for the 90-day total investment horizon General Motors is expected to generate 16.14 times more return on investment than Aurora Technology. However, GM is 16.14 times more volatile than Aurora Technology Acquisition. It trades about 0.07 of its potential returns per unit of risk. Aurora Technology Acquisition is currently generating about 0.19 per unit of risk. If you would invest 3,617 in General Motors on September 2, 2024 and sell it today you would earn a total of 1,942 from holding General Motors or generate 53.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 7.8% |
| Values | Daily Returns |
General Motors vs. Aurora Technology Acquisition
Performance |
| Timeline |
| General Motors |
| Aurora Technology |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
GM and Aurora Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Aurora Technology
The main advantage of trading using opposite GM and Aurora Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Aurora Technology 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 Technology will offset losses from the drop in Aurora Technology's long position.The idea behind General Motors and Aurora Technology Acquisition 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.| Aurora Technology vs. Chipotle Mexican Grill | Aurora Technology vs. RCI Hospitality Holdings | Aurora Technology vs. Dennys Corp | Aurora Technology vs. Shake Shack |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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