Correlation Between Johnson Johnson and Aurora Cannabis
Can any of the company-specific risk be diversified away by investing in both Johnson Johnson 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 Johnson Johnson and Aurora Cannabis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Johnson Johnson and Aurora Cannabis, you can compare the effects of market volatilities on Johnson Johnson 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 Johnson Johnson with a short position of Aurora Cannabis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Johnson and Aurora Cannabis.
Diversification Opportunities for Johnson Johnson and Aurora Cannabis
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Johnson and Aurora is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Johnson and Aurora Cannabis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora Cannabis and Johnson Johnson 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 Johnson Johnson 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 Johnson Johnson i.e., Johnson Johnson and Aurora Cannabis go up and down completely randomly.
Pair Corralation between Johnson Johnson and Aurora Cannabis
Considering the 90-day investment horizon Johnson Johnson is expected to generate 48.24 times less return on investment than Aurora Cannabis. But when comparing it to its historical volatility, Johnson Johnson is 7.12 times less risky than Aurora Cannabis. It trades about 0.01 of its potential returns per unit of risk. Aurora Cannabis is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 380.00 in Aurora Cannabis on August 28, 2024 and sell it today you would earn a total of 77.00 from holding Aurora Cannabis or generate 20.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Johnson Johnson vs. Aurora Cannabis
Performance |
| Timeline |
| Johnson Johnson |
| Aurora Cannabis |
Johnson Johnson and Aurora Cannabis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Johnson Johnson and Aurora Cannabis
The main advantage of trading using opposite Johnson Johnson and Aurora Cannabis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Johnson 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.| Johnson Johnson vs. Capricor Therapeutics | Johnson Johnson vs. Soleno Therapeutics | Johnson Johnson vs. Bio Path Holdings | Johnson Johnson vs. Moleculin Biotech |
| Aurora Cannabis vs. Canopy Growth Corp | Aurora Cannabis vs. SNDL Inc | Aurora Cannabis vs. Cronos Group | Aurora Cannabis vs. Curaleaf 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges |