Correlation Between Aurora Innovation and Entegris

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

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

Diversification Opportunities for Aurora Innovation and Entegris

-0.38

Correlation Coefficient

Aurora Innovation  Entegris

Very good diversification

The 3 months correlation between Aurora and Entegris is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Innovation and Entegris in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entegris 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 Entegris. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entegris has no effect on the direction of Aurora Innovation i.e., Aurora Innovation and Entegris go up and down completely randomly.

Pair Corralation between Aurora Innovation and Entegris

Considering the 90-day investment horizon Aurora Innovation is expected to under-perform the Entegris. In addition to that, Aurora Innovation is 2.2 times more volatile than Entegris. It trades about -0.17 of its total potential returns per unit of risk. Entegris is currently generating about -0.05 per unit of volatility. If you would invest  13,596  in Entegris on February 28, 2024 and sell it today you would lose (455.00) from holding Entegris or give up 3.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Aurora Innovation  vs.  Entegris

Aurora Innovation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aurora Innovation has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Aurora Innovation is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Entegris

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Entegris are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Entegris is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Aurora Innovation and Entegris

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

The idea behind Aurora Innovation and Entegris 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.