Correlation Between Current Water and Aurora Solar
Can any of the company-specific risk be diversified away by investing in both Current Water and Aurora Solar 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 Current Water and Aurora Solar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Current Water Technologies and Aurora Solar Technologies, you can compare the effects of market volatilities on Current Water and Aurora Solar 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 Current Water with a short position of Aurora Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Current Water and Aurora Solar.
Diversification Opportunities for Current Water and Aurora Solar
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Current and Aurora is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Current Water Technologies and Aurora Solar Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora Solar Technologies and Current Water 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 Current Water Technologies are associated (or correlated) with Aurora Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurora Solar Technologies has no effect on the direction of Current Water i.e., Current Water and Aurora Solar go up and down completely randomly.
Pair Corralation between Current Water and Aurora Solar
Assuming the 90 days trading horizon Current Water Technologies is expected to generate 1.29 times more return on investment than Aurora Solar. However, Current Water is 1.29 times more volatile than Aurora Solar Technologies. It trades about 0.04 of its potential returns per unit of risk. Aurora Solar Technologies is currently generating about 0.0 per unit of risk. If you would invest 3.00 in Current Water Technologies on August 29, 2024 and sell it today you would lose (0.50) from holding Current Water Technologies or give up 16.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Current Water Technologies vs. Aurora Solar Technologies
Performance |
| Timeline |
| Current Water Techno |
| Aurora Solar Technologies |
Current Water and Aurora Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Current Water and Aurora Solar
The main advantage of trading using opposite Current Water and Aurora Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Current Water position performs unexpectedly, Aurora Solar 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 Solar will offset losses from the drop in Aurora Solar's long position.| Current Water vs. Cielo Waste Solutions | Current Water vs. CHAR Technologies | Current Water vs. Forstrong Global Income | Current Water vs. Terreno Resources Corp |
| Aurora Solar vs. Solar Alliance Energy | Aurora Solar vs. Lite Access Technologies | Aurora Solar vs. Braille Energy Systems |
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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