Correlation Between Zomedica Pharmaceuticals and Aurora Cannabis
Can any of the company-specific risk be diversified away by investing in both Zomedica 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 Zomedica 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 Zomedica Pharmaceuticals Corp and Aurora Cannabis, you can compare the effects of market volatilities on Zomedica 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 Zomedica Pharmaceuticals with a short position of Aurora Cannabis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zomedica Pharmaceuticals and Aurora Cannabis.
Diversification Opportunities for Zomedica Pharmaceuticals and Aurora Cannabis
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Zomedica and Aurora is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Zomedica Pharmaceuticals Corp and Aurora Cannabis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora Cannabis and Zomedica 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 Zomedica Pharmaceuticals Corp 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 Zomedica Pharmaceuticals i.e., Zomedica Pharmaceuticals and Aurora Cannabis go up and down completely randomly.
Pair Corralation between Zomedica Pharmaceuticals and Aurora Cannabis
Considering the 90-day investment horizon Zomedica Pharmaceuticals Corp is expected to under-perform the Aurora Cannabis. In addition to that, Zomedica Pharmaceuticals is 1.04 times more volatile than Aurora Cannabis. It trades about -0.33 of its total potential returns per unit of risk. Aurora Cannabis is currently generating about -0.11 per unit of volatility. If you would invest 454.00 in Aurora Cannabis on September 14, 2024 and sell it today you would lose (29.50) from holding Aurora Cannabis or give up 6.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zomedica Pharmaceuticals Corp vs. Aurora Cannabis
Performance |
| Timeline |
| Zomedica Pharmaceuticals |
| Aurora Cannabis |
Zomedica Pharmaceuticals and Aurora Cannabis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zomedica Pharmaceuticals and Aurora Cannabis
The main advantage of trading using opposite Zomedica Pharmaceuticals and Aurora Cannabis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zomedica 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.| Zomedica Pharmaceuticals vs. Tilray Inc | Zomedica Pharmaceuticals vs. Aurora Cannabis | Zomedica Pharmaceuticals vs. Canopy Growth Corp | Zomedica Pharmaceuticals vs. OrganiGram Holdings |
| Aurora Cannabis vs. Emergent Biosolutions | Aurora Cannabis vs. Bausch Health Companies | Aurora Cannabis vs. Neurocrine Biosciences | Aurora Cannabis vs. Teva Pharma Industries |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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