Correlation Between Schroders Investment and Aurora Investment

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

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

Diversification Opportunities for Schroders Investment and Aurora Investment

0.38

Correlation Coefficient

Schroders Investment  Aurora Investment

Weak diversification

The 3 months correlation between Schroders and Aurora is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Schroders Investment Trusts and Aurora Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora Investment Trust and Schroders 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 Schroders Investment Trusts are associated (or correlated) with Aurora Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurora Investment Trust has no effect on the direction of Schroders Investment i.e., Schroders Investment and Aurora Investment go up and down completely randomly.

Pair Corralation between Schroders Investment and Aurora Investment

Assuming the 90 days trading horizon Schroders Investment Trusts is expected to under-perform the Aurora Investment. But the stock apears to be less risky and, when comparing its historical volatility, Schroders Investment Trusts is 1.33 times less risky than Aurora Investment. The stock trades about -0.05 of its potential returns per unit of risk. The Aurora Investment Trust is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  22,500  in Aurora Investment Trust on December 5, 2024 and sell it today you would earn a total of  1,300  from holding Aurora Investment Trust or generate 5.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Schroders Investment Trusts  vs.  Aurora Investment Trust

Schroders Investment

Risk-Adjusted Performance

Very Weak

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

Aurora Investment Trust

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Aurora Investment Trust are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with Schroders Investment and Aurora Investment

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

The idea behind Schroders Investment Trusts and Aurora Investment Trust 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..