Correlation Between Aurora Investment and Analog Devices

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

By analyzing existing cross correlation between Aurora Investment Trust and Analog Devices, you can compare the effects of market volatilities on Aurora Investment and Analog Devices 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 Investment with a short position of Analog Devices. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurora Investment and Analog Devices.

Diversification Opportunities for Aurora Investment and Analog Devices

0.75

Correlation Coefficient

Aurora Investment  Analog Devices

Poor diversification

The 3 months correlation between Aurora and Analog is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Investment Trust and Analog Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Analog Devices and Aurora Investment 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 Investment Trust are associated (or correlated) with Analog Devices. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Analog Devices has no effect on the direction of Aurora Investment i.e., Aurora Investment and Analog Devices go up and down completely randomly.

Pair Corralation between Aurora Investment and Analog Devices

Assuming the 90 days trading horizon Aurora Investment is expected to generate 5.29 times less return on investment than Analog Devices. But when comparing it to its historical volatility, Aurora Investment Trust is 1.98 times less risky than Analog Devices. It trades about 0.1 of its potential returns per unit of risk. Analog Devices is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  17,693  in Analog Devices on April 20, 2025 and sell it today you would earn a total of  6,515  from holding Analog Devices or generate 36.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Aurora Investment Trust  vs.  Analog Devices

Aurora Investment Trust

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aurora Investment Trust are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Aurora Investment is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Analog Devices

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Analog Devices are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Analog Devices unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aurora Investment and Analog Devices

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

The idea behind Aurora Investment Trust and Analog Devices 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.