Correlation Between Tilray and Aurora Cannabis
Can any of the company-specific risk be diversified away by investing in both Tilray 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 Tilray and Aurora Cannabis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tilray Inc and Aurora Cannabis, you can compare the effects of market volatilities on Tilray 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 Tilray with a short position of Aurora Cannabis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tilray and Aurora Cannabis.
Diversification Opportunities for Tilray and Aurora Cannabis
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Tilray and Aurora is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Tilray Inc and Aurora Cannabis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora Cannabis and Tilray 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 Tilray 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 Tilray i.e., Tilray and Aurora Cannabis go up and down completely randomly.
Pair Corralation between Tilray and Aurora Cannabis
Given the investment horizon of 90 days Tilray Inc is expected to generate 0.85 times more return on investment than Aurora Cannabis. However, Tilray Inc is 1.18 times less risky than Aurora Cannabis. It trades about -0.27 of its potential returns per unit of risk. Aurora Cannabis is currently generating about -0.29 per unit of risk. If you would invest 168.00 in Tilray Inc on August 24, 2024 and sell it today you would lose (37.00) from holding Tilray Inc or give up 22.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tilray Inc vs. Aurora Cannabis
Performance |
| Timeline |
| Tilray Inc |
| Aurora Cannabis |
Tilray and Aurora Cannabis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tilray and Aurora Cannabis
The main advantage of trading using opposite Tilray and Aurora Cannabis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tilray 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 Tilray 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. Catalent | Aurora Cannabis vs. Amphastar P | Aurora Cannabis vs. ANI Pharmaceuticals | Aurora Cannabis vs. Alkermes Plc |
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.
Other Complementary Tools
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories |