Correlation Between Aurora Innovation and EQRx

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

By analyzing existing cross correlation between Aurora Innovation and EQRx Inc, you can compare the effects of market volatilities on Aurora Innovation and EQRx 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 EQRx. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurora Innovation and EQRx.

Diversification Opportunities for Aurora Innovation and EQRx

0.3

Correlation Coefficient

Aurora Innovation  EQRx

Weak diversification

The 3 months correlation between Aurora and EQRx is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Innovation and EQRx Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EQRx Inc 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 EQRx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EQRx Inc has no effect on the direction of Aurora Innovation i.e., Aurora Innovation and EQRx go up and down completely randomly.

Pair Corralation between Aurora Innovation and EQRx

If you would invest  86.00  in Aurora Innovation on September 2, 2024 and sell it today you would earn a total of  24.00  from holding Aurora Innovation or generate 27.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	4.76%
Values	Daily Returns

Aurora Innovation  vs.  EQRx Inc

Aurora Innovation

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aurora Innovation are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Aurora Innovation showed solid returns over the last few months and may actually be approaching a breakup point.

EQRx Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EQRx Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, EQRx is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Aurora Innovation and EQRx

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

The idea behind Aurora Innovation and EQRx Inc 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.