Correlation Between EQRx and Aurora Innovation

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

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

Diversification Opportunities for EQRx and Aurora Innovation

0.0

Correlation Coefficient

EQRx  Aurora Innovation

Pay attention - limited upside

The 3 months correlation between EQRx and Aurora is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding EQRx Inc and Aurora Innovation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora Innovation and EQRx 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 EQRx Inc are associated (or correlated) with Aurora Innovation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurora Innovation has no effect on the direction of EQRx i.e., EQRx and Aurora Innovation go up and down completely randomly.

Pair Corralation between EQRx and Aurora Innovation

If you would invest  112.00  in Aurora Innovation on December 28, 2024 and sell it today you would earn a total of  59.00  from holding Aurora Innovation or generate 52.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

EQRx Inc  vs.  Aurora Innovation

EQRx Inc

Risk-Adjusted Performance

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 strong basic indicators, EQRx is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Aurora Innovation

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aurora Innovation are ranked lower than 8 (%) 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.

Pair Trading with EQRx and Aurora Innovation

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

The idea behind EQRx Inc and Aurora Innovation 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.