Correlation Between Curaleaf Holdings and Aurora Cannabis
Can any of the company-specific risk be diversified away by investing in both Curaleaf Holdings 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 Curaleaf Holdings and Aurora Cannabis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Curaleaf Holdings and Aurora Cannabis, you can compare the effects of market volatilities on Curaleaf Holdings 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 Curaleaf Holdings with a short position of Aurora Cannabis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Curaleaf Holdings and Aurora Cannabis.
Diversification Opportunities for Curaleaf Holdings and Aurora Cannabis
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Curaleaf and Aurora is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Curaleaf Holdings and Aurora Cannabis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora Cannabis and Curaleaf Holdings 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 Curaleaf Holdings 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 Curaleaf Holdings i.e., Curaleaf Holdings and Aurora Cannabis go up and down completely randomly.
Pair Corralation between Curaleaf Holdings and Aurora Cannabis
Assuming the 90 days horizon Curaleaf Holdings is expected to under-perform the Aurora Cannabis. But the otc stock apears to be less risky and, when comparing its historical volatility, Curaleaf Holdings is 1.24 times less risky than Aurora Cannabis. The otc stock trades about -0.02 of its potential returns per unit of risk. The Aurora Cannabis is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 1,210 in Aurora Cannabis on August 27, 2024 and sell it today you would lose (776.00) from holding Aurora Cannabis or give up 64.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Curaleaf Holdings vs. Aurora Cannabis
Performance |
| Timeline |
| Curaleaf Holdings |
| Aurora Cannabis |
Curaleaf Holdings and Aurora Cannabis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Curaleaf Holdings and Aurora Cannabis
The main advantage of trading using opposite Curaleaf Holdings and Aurora Cannabis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Curaleaf Holdings 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.The idea behind Curaleaf Holdings and Aurora Cannabis pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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