Correlation Between Aurora Innovation and WinVest Acquisition

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

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

Diversification Opportunities for Aurora Innovation and WinVest Acquisition

0.49

Correlation Coefficient

Aurora Innovation  WinVest Acquisition

Very weak diversification

The 3 months correlation between Aurora and WinVest is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Innovation and WinVest Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WinVest Acquisition Corp 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 WinVest Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WinVest Acquisition Corp has no effect on the direction of Aurora Innovation i.e., Aurora Innovation and WinVest Acquisition go up and down completely randomly.

Pair Corralation between Aurora Innovation and WinVest Acquisition

Assuming the 90 days horizon Aurora Innovation is expected to generate 15.8 times more return on investment than WinVest Acquisition. However, Aurora Innovation is 15.8 times more volatile than WinVest Acquisition Corp. It trades about 0.08 of its potential returns per unit of risk. WinVest Acquisition Corp is currently generating about 0.04 per unit of risk. If you would invest  24.00  in Aurora Innovation on August 31, 2024 and sell it today you would earn a total of  86.00  from holding Aurora Innovation or generate 358.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.79%
Values	Daily Returns

Aurora Innovation  vs.  WinVest Acquisition Corp

Aurora Innovation

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Aurora Innovation are ranked lower than 16 (%) 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.

WinVest Acquisition Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in WinVest Acquisition Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, WinVest Acquisition is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Aurora Innovation and WinVest Acquisition

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

The idea behind Aurora Innovation and WinVest Acquisition Corp 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.