Correlation Between Grid Dynamics and Aurora Innovation
Can any of the company-specific risk be diversified away by investing in both Grid Dynamics 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 Grid Dynamics and Aurora Innovation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grid Dynamics Holdings and Aurora Innovation, you can compare the effects of market volatilities on Grid Dynamics 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 Grid Dynamics with a short position of Aurora Innovation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grid Dynamics and Aurora Innovation.
Diversification Opportunities for Grid Dynamics and Aurora Innovation
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Grid and Aurora is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Grid Dynamics Holdings and Aurora Innovation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora Innovation and Grid Dynamics 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 Grid Dynamics Holdings 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 Grid Dynamics i.e., Grid Dynamics and Aurora Innovation go up and down completely randomly.
Pair Corralation between Grid Dynamics and Aurora Innovation
Given the investment horizon of 90 days Grid Dynamics is expected to generate 5.49 times less return on investment than Aurora Innovation. But when comparing it to its historical volatility, Grid Dynamics Holdings is 3.49 times less risky than Aurora Innovation. It trades about 0.05 of its potential returns per unit of risk. Aurora Innovation is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 19.00 in Aurora Innovation on September 6, 2024 and sell it today you would earn a total of 78.00 from holding Aurora Innovation or generate 410.53% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Grid Dynamics Holdings vs. Aurora Innovation
Performance |
Timeline |
Grid Dynamics Holdings |
Aurora Innovation |
Grid Dynamics and Aurora Innovation Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Grid Dynamics and Aurora Innovation
The main advantage of trading using opposite Grid Dynamics and Aurora Innovation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grid Dynamics 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.Grid Dynamics vs. ExlService Holdings | Grid Dynamics vs. ASGN Inc | Grid Dynamics vs. WNS Holdings | Grid Dynamics vs. Gartner |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |