Correlation Between Aurora Cannabis and RIV Capital
Can any of the company-specific risk be diversified away by investing in both Aurora Cannabis and RIV Capital 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 RIV Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aurora Cannabis and RIV Capital, you can compare the effects of market volatilities on Aurora Cannabis and RIV Capital 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 RIV Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurora Cannabis and RIV Capital.
Diversification Opportunities for Aurora Cannabis and RIV Capital
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aurora and RIV is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Cannabis and RIV Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RIV Capital 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 RIV Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RIV Capital has no effect on the direction of Aurora Cannabis i.e., Aurora Cannabis and RIV Capital go up and down completely randomly.
Pair Corralation between Aurora Cannabis and RIV Capital
Considering the 90-day investment horizon Aurora Cannabis is expected to generate 2.23 times less return on investment than RIV Capital. But when comparing it to its historical volatility, Aurora Cannabis is 1.37 times less risky than RIV Capital. It trades about 0.02 of its potential returns per unit of risk. RIV Capital is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 12.00 in RIV Capital on September 4, 2024 and sell it today you would lose (2.50) from holding RIV Capital or give up 20.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.66% |
| Values | Daily Returns |
Aurora Cannabis vs. RIV Capital
Performance |
| Timeline |
| Aurora Cannabis |
| RIV Capital |
Aurora Cannabis and RIV Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aurora Cannabis and RIV Capital
The main advantage of trading using opposite Aurora Cannabis and RIV Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aurora Cannabis position performs unexpectedly, RIV Capital 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 RIV Capital will offset losses from the drop in RIV Capital's long position.| Aurora Cannabis vs. Crinetics Pharmaceuticals | Aurora Cannabis vs. Enanta Pharmaceuticals | Aurora Cannabis vs. Amicus Therapeutics | Aurora Cannabis vs. Connect Biopharma Holdings |
| RIV Capital vs. Cann American Corp | RIV Capital vs. Speakeasy Cannabis Club | RIV Capital vs. Benchmark Botanics | RIV Capital vs. Link Reservations |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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