Correlation Between Big Rock and Auxly Cannabis
Can any of the company-specific risk be diversified away by investing in both Big Rock and Auxly 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 Big Rock and Auxly Cannabis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Big Rock Brewery and Auxly Cannabis Group, you can compare the effects of market volatilities on Big Rock and Auxly 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 Big Rock with a short position of Auxly Cannabis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Big Rock and Auxly Cannabis.
Diversification Opportunities for Big Rock and Auxly Cannabis
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Big and Auxly is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Big Rock Brewery and Auxly Cannabis Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auxly Cannabis Group and Big Rock 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 Big Rock Brewery are associated (or correlated) with Auxly Cannabis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auxly Cannabis Group has no effect on the direction of Big Rock i.e., Big Rock and Auxly Cannabis go up and down completely randomly.
Pair Corralation between Big Rock and Auxly Cannabis
Assuming the 90 days horizon Big Rock is expected to generate 2.93 times less return on investment than Auxly Cannabis. But when comparing it to its historical volatility, Big Rock Brewery is 1.65 times less risky than Auxly Cannabis. It trades about 0.04 of its potential returns per unit of risk. Auxly Cannabis Group is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 4.00 in Auxly Cannabis Group on November 2, 2024 and sell it today you would earn a total of 1.00 from holding Auxly Cannabis Group or generate 25.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Big Rock Brewery vs. Auxly Cannabis Group
Performance |
| Timeline |
| Big Rock Brewery |
| Auxly Cannabis Group |
Big Rock and Auxly Cannabis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Big Rock and Auxly Cannabis
The main advantage of trading using opposite Big Rock and Auxly Cannabis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Big Rock position performs unexpectedly, Auxly 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 Auxly Cannabis will offset losses from the drop in Auxly Cannabis' long position.| Big Rock vs. Corby Spirit and | Big Rock vs. Gamehost | Big Rock vs. Andrew Peller Limited | Big Rock vs. Buhler Industries |
| Auxly Cannabis vs. OrganiGram Holdings | Auxly Cannabis vs. Tilray Inc | Auxly Cannabis vs. Lifeist Wellness | Auxly Cannabis vs. Medipharm Labs Corp |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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