Correlation Between Link Reservations and Aurora Cannabis
Can any of the company-specific risk be diversified away by investing in both Link Reservations 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 Link Reservations and Aurora Cannabis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Link Reservations and Aurora Cannabis, you can compare the effects of market volatilities on Link Reservations 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 Link Reservations with a short position of Aurora Cannabis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Link Reservations and Aurora Cannabis.
Diversification Opportunities for Link Reservations and Aurora Cannabis
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Link and Aurora is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Link Reservations and Aurora Cannabis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora Cannabis and Link Reservations 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 Link Reservations 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 Link Reservations i.e., Link Reservations and Aurora Cannabis go up and down completely randomly.
Pair Corralation between Link Reservations and Aurora Cannabis
Given the investment horizon of 90 days Link Reservations is expected to generate 4.52 times more return on investment than Aurora Cannabis. However, Link Reservations is 4.52 times more volatile than Aurora Cannabis. It trades about 0.11 of its potential returns per unit of risk. Aurora Cannabis is currently generating about 0.02 per unit of risk. If you would invest 0.20 in Link Reservations on September 4, 2024 and sell it today you would lose (0.10) from holding Link Reservations or give up 50.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.66% |
| Values | Daily Returns |
Link Reservations vs. Aurora Cannabis
Performance |
| Timeline |
| Link Reservations |
| Aurora Cannabis |
Link Reservations and Aurora Cannabis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Link Reservations and Aurora Cannabis
The main advantage of trading using opposite Link Reservations and Aurora Cannabis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Link Reservations 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.| Link Reservations vs. Virtual Medical International | Link Reservations vs. Anything Tech Media | Link Reservations vs. Global Hemp Group | Link Reservations vs. Cannabis Suisse Corp |
| 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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