Correlation Between Aurora Cannabis and CbdMD
Can any of the company-specific risk be diversified away by investing in both Aurora Cannabis and CbdMD 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 CbdMD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aurora Cannabis and cbdMD Inc, you can compare the effects of market volatilities on Aurora Cannabis and CbdMD 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 CbdMD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurora Cannabis and CbdMD.
Diversification Opportunities for Aurora Cannabis and CbdMD
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Aurora and CbdMD is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Cannabis and cbdMD Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on cbdMD 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 CbdMD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of cbdMD Inc has no effect on the direction of Aurora Cannabis i.e., Aurora Cannabis and CbdMD go up and down completely randomly.
Pair Corralation between Aurora Cannabis and CbdMD
Considering the 90-day investment horizon Aurora Cannabis is expected to under-perform the CbdMD. In addition to that, Aurora Cannabis is 1.3 times more volatile than cbdMD Inc. It trades about -0.24 of its total potential returns per unit of risk. cbdMD Inc is currently generating about 0.11 per unit of volatility. If you would invest 71.00 in cbdMD Inc on August 28, 2024 and sell it today you would earn a total of 4.00 from holding cbdMD Inc or generate 5.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 76.19% |
| Values | Daily Returns |
Aurora Cannabis vs. cbdMD Inc
Performance |
| Timeline |
| Aurora Cannabis |
| cbdMD Inc |
Aurora Cannabis and CbdMD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aurora Cannabis and CbdMD
The main advantage of trading using opposite Aurora Cannabis and CbdMD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aurora Cannabis position performs unexpectedly, CbdMD 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 CbdMD will offset losses from the drop in CbdMD's long position.| Aurora Cannabis vs. Capricor Therapeutics | Aurora Cannabis vs. Soleno Therapeutics | Aurora Cannabis vs. Bio Path Holdings | Aurora Cannabis vs. Moleculin Biotech |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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