Correlation Between Aurora Cannabis and Tilray
Can any of the company-specific risk be diversified away by investing in both Aurora Cannabis and Tilray 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 Tilray into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aurora Cannabis and Tilray Inc, you can compare the effects of market volatilities on Aurora Cannabis and Tilray 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 Tilray. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurora Cannabis and Tilray.
Diversification Opportunities for Aurora Cannabis and Tilray
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Aurora and Tilray is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Cannabis and Tilray Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tilray Inc 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 Tilray. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tilray Inc has no effect on the direction of Aurora Cannabis i.e., Aurora Cannabis and Tilray go up and down completely randomly.
Pair Corralation between Aurora Cannabis and Tilray
Considering the 90-day investment horizon Aurora Cannabis is expected to under-perform the Tilray. In addition to that, Aurora Cannabis is 1.18 times more volatile than Tilray Inc. It trades about -0.29 of its total potential returns per unit of risk. Tilray Inc is currently generating about -0.27 per unit of volatility. If you would invest 168.00 in Tilray Inc on August 24, 2024 and sell it today you would lose (37.00) from holding Tilray Inc or give up 22.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aurora Cannabis vs. Tilray Inc
Performance |
| Timeline |
| Aurora Cannabis |
| Tilray Inc |
Aurora Cannabis and Tilray Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aurora Cannabis and Tilray
The main advantage of trading using opposite Aurora Cannabis and Tilray positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aurora Cannabis position performs unexpectedly, Tilray 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 Tilray will offset losses from the drop in Tilray's long position.| Aurora Cannabis vs. Catalent | Aurora Cannabis vs. Amphastar P | Aurora Cannabis vs. ANI Pharmaceuticals | Aurora Cannabis vs. Alkermes Plc |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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