Correlation Between Aurora Innovation and Mind Technology

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

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

Diversification Opportunities for Aurora Innovation and Mind Technology

-0.41

Correlation Coefficient

Aurora Innovation  Mind Technology

Very good diversification

The 3 months correlation between Aurora and Mind is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Innovation and Mind Technology Pref in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mind Technology Pref 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 Mind Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mind Technology Pref has no effect on the direction of Aurora Innovation i.e., Aurora Innovation and Mind Technology go up and down completely randomly.

Pair Corralation between Aurora Innovation and Mind Technology

Considering the 90-day investment horizon Aurora Innovation is expected to generate 0.52 times more return on investment than Mind Technology. However, Aurora Innovation is 1.94 times less risky than Mind Technology. It trades about 0.17 of its potential returns per unit of risk. Mind Technology Pref is currently generating about -0.12 per unit of risk. If you would invest  212.00  in Aurora Innovation on September 2, 2024 and sell it today you would earn a total of  435.00  from holding Aurora Innovation or generate 205.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	52.38%
Values	Daily Returns

Aurora Innovation  vs.  Mind Technology Pref

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 unsteady basic indicators, Aurora Innovation reported solid returns over the last few months and may actually be approaching a breakup point.

Mind Technology Pref

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mind Technology Pref has generated negative risk-adjusted returns adding no value to investors with long positions. Even with fragile performance in the last few months, the Preferred Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Aurora Innovation and Mind Technology

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

The idea behind Aurora Innovation and Mind Technology Pref 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.

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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.