Correlation Between Science Applications and Aurora Innovation
Can any of the company-specific risk be diversified away by investing in both Science Applications 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 Science Applications and Aurora Innovation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Science Applications International and Aurora Innovation, you can compare the effects of market volatilities on Science Applications 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 Science Applications with a short position of Aurora Innovation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Science Applications and Aurora Innovation.
Diversification Opportunities for Science Applications and Aurora Innovation
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Science and Aurora is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Science Applications Internati and Aurora Innovation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora Innovation and Science Applications 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 Science Applications International 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 Science Applications i.e., Science Applications and Aurora Innovation go up and down completely randomly.
Pair Corralation between Science Applications and Aurora Innovation
Given the investment horizon of 90 days Science Applications is expected to generate 21.01 times less return on investment than Aurora Innovation. But when comparing it to its historical volatility, Science Applications International is 6.69 times less risky than Aurora Innovation. It trades about 0.03 of its potential returns per unit of risk. Aurora Innovation is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 23.00 in Aurora Innovation on September 2, 2024 and sell it today you would earn a total of 87.00 from holding Aurora Innovation or generate 378.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Science Applications Internati vs. Aurora Innovation
Performance |
| Timeline |
| Science Applications |
| Aurora Innovation |
Science Applications and Aurora Innovation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Science Applications and Aurora Innovation
The main advantage of trading using opposite Science Applications and Aurora Innovation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Science Applications 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.| Science Applications vs. FiscalNote Holdings | Science Applications vs. Innodata | Science Applications vs. Aurora Innovation | Science Applications vs. Conduent |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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