Correlation Between Enanta Pharmaceuticals and Aurora Cannabis
Can any of the company-specific risk be diversified away by investing in both Enanta Pharmaceuticals 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 Enanta Pharmaceuticals and Aurora Cannabis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enanta Pharmaceuticals and Aurora Cannabis, you can compare the effects of market volatilities on Enanta Pharmaceuticals 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 Enanta Pharmaceuticals with a short position of Aurora Cannabis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enanta Pharmaceuticals and Aurora Cannabis.
Diversification Opportunities for Enanta Pharmaceuticals and Aurora Cannabis
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Enanta and Aurora is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Enanta Pharmaceuticals and Aurora Cannabis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora Cannabis and Enanta Pharmaceuticals 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 Enanta Pharmaceuticals 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 Enanta Pharmaceuticals i.e., Enanta Pharmaceuticals and Aurora Cannabis go up and down completely randomly.
Pair Corralation between Enanta Pharmaceuticals and Aurora Cannabis
Given the investment horizon of 90 days Enanta Pharmaceuticals is expected to under-perform the Aurora Cannabis. But the stock apears to be less risky and, when comparing its historical volatility, Enanta Pharmaceuticals is 1.41 times less risky than Aurora Cannabis. The stock trades about -0.18 of its potential returns per unit of risk. The Aurora Cannabis is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 567.00 in Aurora Cannabis on September 4, 2024 and sell it today you would lose (104.00) from holding Aurora Cannabis or give up 18.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enanta Pharmaceuticals vs. Aurora Cannabis
Performance |
| Timeline |
| Enanta Pharmaceuticals |
| Aurora Cannabis |
Enanta Pharmaceuticals and Aurora Cannabis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enanta Pharmaceuticals and Aurora Cannabis
The main advantage of trading using opposite Enanta Pharmaceuticals and Aurora Cannabis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enanta Pharmaceuticals 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.| Enanta Pharmaceuticals vs. Candel Therapeutics | Enanta Pharmaceuticals vs. Cingulate Warrants | Enanta Pharmaceuticals vs. Unicycive Therapeutics | Enanta Pharmaceuticals vs. Cardio Diagnostics Holdings |
| Aurora Cannabis vs. Crinetics Pharmaceuticals | Aurora Cannabis vs. Enanta Pharmaceuticals | Aurora Cannabis vs. Amicus Therapeutics | Aurora Cannabis vs. Connect Biopharma Holdings |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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