Correlation Between Air Canada and Aurora Cannabis
Can any of the company-specific risk be diversified away by investing in both Air Canada and Aurora Cannabis 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 Air Canada and Aurora Cannabis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Canada and Aurora Cannabis, you can compare the effects of market volatilities on Air Canada and Aurora Cannabis 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 Air Canada with a short position of Aurora Cannabis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Canada and Aurora Cannabis.
Diversification Opportunities for Air Canada and Aurora Cannabis
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Air and Aurora is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Air Canada and Aurora Cannabis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora Cannabis and Air Canada 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 Air Canada are associated (or correlated) with Aurora Cannabis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurora Cannabis has no effect on the direction of Air Canada i.e., Air Canada and Aurora Cannabis go up and down completely randomly.
Pair Corralation between Air Canada and Aurora Cannabis
Assuming the 90 days horizon Air Canada is expected to generate 0.55 times more return on investment than Aurora Cannabis. However, Air Canada is 1.81 times less risky than Aurora Cannabis. It trades about 0.15 of its potential returns per unit of risk. Aurora Cannabis is currently generating about -0.03 per unit of risk. If you would invest 1,722 in Air Canada on September 13, 2024 and sell it today you would earn a total of 783.00 from holding Air Canada or generate 45.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Canada vs. Aurora Cannabis
Performance |
| Timeline |
| Air Canada |
| Aurora Cannabis |
Air Canada and Aurora Cannabis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Canada and Aurora Cannabis
The main advantage of trading using opposite Air Canada and Aurora Cannabis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Canada position performs unexpectedly, Aurora Cannabis 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 Aurora Cannabis will offset losses from the drop in Aurora Cannabis' long position.| Air Canada vs. Lycos Energy | Air Canada vs. Scandium Canada | Air Canada vs. Voice Mobility International | Air Canada vs. Martina Minerals Corp |
| Aurora Cannabis vs. Canopy Growth Corp | Aurora Cannabis vs. Cronos Group | Aurora Cannabis vs. Air Canada | Aurora Cannabis vs. BlackBerry |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
Other Complementary Tools
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets |