Correlation Between Aurora Innovation and Kyndryl Holdings

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

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

Diversification Opportunities for Aurora Innovation and Kyndryl Holdings

0.4

Correlation Coefficient

Aurora Innovation  Kyndryl Holdings

Very weak diversification

The 3 months correlation between Aurora and Kyndryl is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Innovation and Kyndryl Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kyndryl Holdings 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 Kyndryl Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kyndryl Holdings has no effect on the direction of Aurora Innovation i.e., Aurora Innovation and Kyndryl Holdings go up and down completely randomly.

Pair Corralation between Aurora Innovation and Kyndryl Holdings

Considering the 90-day investment horizon Aurora Innovation is expected to generate 2.39 times more return on investment than Kyndryl Holdings. However, Aurora Innovation is 2.39 times more volatile than Kyndryl Holdings. It trades about 0.13 of its potential returns per unit of risk. Kyndryl Holdings is currently generating about 0.25 per unit of risk. If you would invest  426.00  in Aurora Innovation on August 31, 2024 and sell it today you would earn a total of  223.00  from holding Aurora Innovation or generate 52.35% return on investment over 90 days.

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

Aurora Innovation  vs.  Kyndryl Holdings

Aurora Innovation

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aurora Innovation are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively sluggish basic indicators, Aurora Innovation reported solid returns over the last few months and may actually be approaching a breakup point.

Kyndryl Holdings

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kyndryl Holdings are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Kyndryl Holdings exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aurora Innovation and Kyndryl Holdings

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

The idea behind Aurora Innovation and Kyndryl Holdings 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.