Correlation Between Sparta Capital and Aurora Innovation
Can any of the company-specific risk be diversified away by investing in both Sparta Capital 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 Sparta Capital and Aurora Innovation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sparta Capital and Aurora Innovation, you can compare the effects of market volatilities on Sparta Capital 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 Sparta Capital with a short position of Aurora Innovation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sparta Capital and Aurora Innovation.
Diversification Opportunities for Sparta Capital and Aurora Innovation
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sparta and Aurora is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Sparta Capital and Aurora Innovation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora Innovation and Sparta Capital 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 Sparta Capital 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 Sparta Capital i.e., Sparta Capital and Aurora Innovation go up and down completely randomly.
Pair Corralation between Sparta Capital and Aurora Innovation
Assuming the 90 days horizon Sparta Capital is expected to under-perform the Aurora Innovation. But the pink sheet apears to be less risky and, when comparing its historical volatility, Sparta Capital is 2.89 times less risky than Aurora Innovation. The pink sheet trades about -0.21 of its potential returns per unit of risk. The Aurora Innovation is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 116.00 in Aurora Innovation on August 29, 2024 and sell it today you would lose (22.00) from holding Aurora Innovation or give up 18.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Sparta Capital vs. Aurora Innovation
Performance |
| Timeline |
| Sparta Capital |
| Aurora Innovation |
Sparta Capital and Aurora Innovation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sparta Capital and Aurora Innovation
The main advantage of trading using opposite Sparta Capital and Aurora Innovation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sparta Capital 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.| Sparta Capital vs. Zurn Elkay Water | Sparta Capital vs. Federal Signal | Sparta Capital vs. Energy Recovery | Sparta Capital vs. CECO Environmental Corp |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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