Correlation Between Alaska Energy and Aurora Cannabis
Can any of the company-specific risk be diversified away by investing in both Alaska Energy 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 Alaska Energy and Aurora Cannabis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alaska Energy Metals and Aurora Cannabis, you can compare the effects of market volatilities on Alaska Energy 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 Alaska Energy with a short position of Aurora Cannabis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alaska Energy and Aurora Cannabis.
Diversification Opportunities for Alaska Energy and Aurora Cannabis
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Alaska and Aurora is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Alaska Energy Metals and Aurora Cannabis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora Cannabis and Alaska Energy 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 Alaska Energy Metals 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 Alaska Energy i.e., Alaska Energy and Aurora Cannabis go up and down completely randomly.
Pair Corralation between Alaska Energy and Aurora Cannabis
Assuming the 90 days trading horizon Alaska Energy Metals is expected to under-perform the Aurora Cannabis. But the stock apears to be less risky and, when comparing its historical volatility, Alaska Energy Metals is 1.97 times less risky than Aurora Cannabis. The stock trades about -0.17 of its potential returns per unit of risk. The Aurora Cannabis is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 504.00 in Aurora Cannabis on December 4, 2024 and sell it today you would earn a total of 189.00 from holding Aurora Cannabis or generate 37.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alaska Energy Metals vs. Aurora Cannabis
Performance |
| Timeline |
| Alaska Energy Metals |
| Aurora Cannabis |
Alaska Energy and Aurora Cannabis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alaska Energy and Aurora Cannabis
The main advantage of trading using opposite Alaska Energy and Aurora Cannabis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alaska Energy 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.| Alaska Energy vs. Rogers Communications | Alaska Energy vs. Quipt Home Medical | Alaska Energy vs. Sun Life Financial | Alaska Energy vs. Royal Bank of |
| 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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