Correlation Between Aurora Investment and Electronic Arts

Can any of the company-specific risk be diversified away by investing in both Aurora Investment and Electronic Arts 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 Aurora Investment and Electronic Arts into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aurora Investment Trust and Electronic Arts, you can compare the effects of market volatilities on Aurora Investment and Electronic Arts 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 Aurora Investment with a short position of Electronic Arts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurora Investment and Electronic Arts.

Diversification Opportunities for Aurora Investment and Electronic Arts

-0.48

Correlation Coefficient

Aurora Investment  Electronic Arts

Very good diversification

The 3 months correlation between Aurora and Electronic is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Investment Trust and Electronic Arts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electronic Arts and Aurora Investment 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 Aurora Investment Trust are associated (or correlated) with Electronic Arts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electronic Arts has no effect on the direction of Aurora Investment i.e., Aurora Investment and Electronic Arts go up and down completely randomly.

Pair Corralation between Aurora Investment and Electronic Arts

Assuming the 90 days trading horizon Aurora Investment Trust is expected to generate 1.19 times more return on investment than Electronic Arts. However, Aurora Investment is 1.19 times more volatile than Electronic Arts. It trades about -0.03 of its potential returns per unit of risk. Electronic Arts is currently generating about -0.61 per unit of risk. If you would invest  23,000  in Aurora Investment Trust on October 8, 2024 and sell it today you would lose (200.00) from holding Aurora Investment Trust or give up 0.87% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	94.74%
Values	Daily Returns

Aurora Investment Trust  vs.  Electronic Arts

Aurora Investment Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aurora Investment Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Aurora Investment is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Electronic Arts

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Electronic Arts are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Electronic Arts is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Aurora Investment and Electronic Arts

The main advantage of trading using opposite Aurora Investment and Electronic Arts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aurora Investment position performs unexpectedly, Electronic Arts 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 Electronic Arts will offset losses from the drop in Electronic Arts' long position.

The idea behind Aurora Investment Trust and Electronic Arts 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.

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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..