Correlation Between Sohm and Aurora Cannabis
Can any of the company-specific risk be diversified away by investing in both Sohm 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 Sohm and Aurora Cannabis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sohm Inc and Aurora Cannabis, you can compare the effects of market volatilities on Sohm 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 Sohm with a short position of Aurora Cannabis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sohm and Aurora Cannabis.
Diversification Opportunities for Sohm and Aurora Cannabis
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sohm and Aurora is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Sohm Inc and Aurora Cannabis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora Cannabis and Sohm 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 Sohm Inc 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 Sohm i.e., Sohm and Aurora Cannabis go up and down completely randomly.
Pair Corralation between Sohm and Aurora Cannabis
Given the investment horizon of 90 days Sohm Inc is expected to under-perform the Aurora Cannabis. In addition to that, Sohm is 1.31 times more volatile than Aurora Cannabis. It trades about -0.09 of its total potential returns per unit of risk. Aurora Cannabis is currently generating about 0.0 per unit of volatility. If you would invest 1,120 in Aurora Cannabis on August 29, 2024 and sell it today you would lose (666.00) from holding Aurora Cannabis or give up 59.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 8.67% |
| Values | Daily Returns |
Sohm Inc vs. Aurora Cannabis
Performance |
| Timeline |
| Sohm Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Aurora Cannabis |
Sohm and Aurora Cannabis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sohm and Aurora Cannabis
The main advantage of trading using opposite Sohm and Aurora Cannabis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sohm 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 Sohm Inc 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. 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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