Correlation Between Microsoft and Aurora Technology
Can any of the company-specific risk be diversified away by investing in both Microsoft 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 Microsoft and Aurora Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Aurora Technology Acquisition, you can compare the effects of market volatilities on Microsoft 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 Microsoft with a short position of Aurora Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Aurora Technology.
Diversification Opportunities for Microsoft and Aurora Technology
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microsoft and Aurora is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Aurora Technology Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora Technology and Microsoft 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 Microsoft 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 Microsoft i.e., Microsoft and Aurora Technology go up and down completely randomly.
Pair Corralation between Microsoft and Aurora Technology
Given the investment horizon of 90 days Microsoft is expected to generate 19.93 times less return on investment than Aurora Technology. But when comparing it to its historical volatility, Microsoft is 12.0 times less risky than Aurora Technology. It trades about 0.08 of its potential returns per unit of risk. Aurora Technology Acquisition is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 7.75 in Aurora Technology Acquisition on August 26, 2024 and sell it today you would earn a total of 6.25 from holding Aurora Technology Acquisition or generate 80.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 12.07% |
| Values | Daily Returns |
Microsoft vs. Aurora Technology Acquisition
Performance |
| Timeline |
| Microsoft |
| Aurora Technology |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Microsoft and Aurora Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Aurora Technology
The main advantage of trading using opposite Microsoft and Aurora Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft 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.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Rapid7 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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