Correlation Between Aurora Cannabis and Air Canada
Can any of the company-specific risk be diversified away by investing in both Aurora Cannabis and Air Canada 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 Cannabis and Air Canada into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aurora Cannabis and Air Canada, you can compare the effects of market volatilities on Aurora Cannabis and Air Canada 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 Cannabis with a short position of Air Canada. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurora Cannabis and Air Canada.
Diversification Opportunities for Aurora Cannabis and Air Canada
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Aurora and Air is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Cannabis and Air Canada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Canada and Aurora Cannabis 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 Cannabis are associated (or correlated) with Air Canada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Canada has no effect on the direction of Aurora Cannabis i.e., Aurora Cannabis and Air Canada go up and down completely randomly.
Pair Corralation between Aurora Cannabis and Air Canada
Assuming the 90 days trading horizon Aurora Cannabis is expected to generate 2.57 times more return on investment than Air Canada. However, Aurora Cannabis is 2.57 times more volatile than Air Canada. It trades about -0.08 of its potential returns per unit of risk. Air Canada is currently generating about -0.25 per unit of risk. If you would invest 588.00 in Aurora Cannabis on October 20, 2024 and sell it today you would lose (32.00) from holding Aurora Cannabis or give up 5.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aurora Cannabis vs. Air Canada
Performance |
| Timeline |
| Aurora Cannabis |
| Air Canada |
Aurora Cannabis and Air Canada Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aurora Cannabis and Air Canada
The main advantage of trading using opposite Aurora Cannabis and Air Canada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aurora Cannabis position performs unexpectedly, Air Canada 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 Air Canada will offset losses from the drop in Air Canada's long position.| 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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