Correlation Between GM and Aurora Acquisition
Can any of the company-specific risk be diversified away by investing in both GM and Aurora Acquisition 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 Acquisition 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 Acquisition Corp, you can compare the effects of market volatilities on GM and Aurora Acquisition 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 Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Aurora Acquisition.
Diversification Opportunities for GM and Aurora Acquisition
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between GM and Aurora is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Aurora Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora Acquisition Corp 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 Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurora Acquisition Corp has no effect on the direction of GM i.e., GM and Aurora Acquisition go up and down completely randomly.
Pair Corralation between GM and Aurora Acquisition
Allowing for the 90-day total investment horizon General Motors is expected to generate 2.72 times more return on investment than Aurora Acquisition. However, GM is 2.72 times more volatile than Aurora Acquisition Corp. It trades about 0.05 of its potential returns per unit of risk. Aurora Acquisition Corp is currently generating about 0.07 per unit of risk. If you would invest 3,805 in General Motors on September 3, 2024 and sell it today you would earn a total of 1,699 from holding General Motors or generate 44.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 30.71% |
| Values | Daily Returns |
General Motors vs. Aurora Acquisition Corp
Performance |
| Timeline |
| General Motors |
| Aurora Acquisition Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
GM and Aurora Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Aurora Acquisition
The main advantage of trading using opposite GM and Aurora Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Aurora Acquisition 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 Acquisition will offset losses from the drop in Aurora Acquisition's long position.The idea behind General Motors and Aurora Acquisition Corp 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 Acquisition vs. Aehr Test Systems | Aurora Acquisition vs. Everspin Technologies | Aurora Acquisition vs. MACOM Technology Solutions | Aurora Acquisition vs. ON Semiconductor |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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