Correlation Between Aurora Innovation and Magic Software
Can any of the company-specific risk be diversified away by investing in both Aurora Innovation and Magic Software 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 Innovation and Magic Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aurora Innovation and Magic Software Enterprises, you can compare the effects of market volatilities on Aurora Innovation and Magic Software 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 Innovation with a short position of Magic Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurora Innovation and Magic Software.
Diversification Opportunities for Aurora Innovation and Magic Software
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aurora and Magic is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Innovation and Magic Software Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magic Software Enter and Aurora Innovation 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 Innovation are associated (or correlated) with Magic Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magic Software Enter has no effect on the direction of Aurora Innovation i.e., Aurora Innovation and Magic Software go up and down completely randomly.
Pair Corralation between Aurora Innovation and Magic Software
Considering the 90-day investment horizon Aurora Innovation is expected to generate 2.85 times more return on investment than Magic Software. However, Aurora Innovation is 2.85 times more volatile than Magic Software Enterprises. It trades about 0.09 of its potential returns per unit of risk. Magic Software Enterprises is currently generating about 0.12 per unit of risk. If you would invest 561.00 in Aurora Innovation on October 9, 2024 and sell it today you would earn a total of 89.00 from holding Aurora Innovation or generate 15.86% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Aurora Innovation vs. Magic Software Enterprises
Performance |
Timeline |
Aurora Innovation |
Magic Software Enter |
Aurora Innovation and Magic Software Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Aurora Innovation and Magic Software
The main advantage of trading using opposite Aurora Innovation and Magic Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aurora Innovation position performs unexpectedly, Magic Software 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 Magic Software will offset losses from the drop in Magic Software's long position.Aurora Innovation vs. FiscalNote Holdings | Aurora Innovation vs. Innodata | Aurora Innovation vs. International Business Machines | Aurora Innovation vs. BigBearai Holdings |
Magic Software vs. The Hackett Group | Magic Software vs. CSP Inc | Magic Software vs. Formula Systems 1985 | Magic Software vs. Information Services Group |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
Other Complementary Tools
Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine |