Correlation Between Aurora Cannabis and Arrowhead Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Aurora Cannabis and Arrowhead Pharmaceuticals 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 Aurora Cannabis and Arrowhead Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aurora Cannabis and Arrowhead Pharmaceuticals, you can compare the effects of market volatilities on Aurora Cannabis and Arrowhead Pharmaceuticals 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 Aurora Cannabis with a short position of Arrowhead Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurora Cannabis and Arrowhead Pharmaceuticals.
Diversification Opportunities for Aurora Cannabis and Arrowhead Pharmaceuticals
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Aurora and Arrowhead is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Cannabis and Arrowhead Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrowhead Pharmaceuticals and Aurora Cannabis 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 Aurora Cannabis are associated (or correlated) with Arrowhead Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrowhead Pharmaceuticals has no effect on the direction of Aurora Cannabis i.e., Aurora Cannabis and Arrowhead Pharmaceuticals go up and down completely randomly.
Pair Corralation between Aurora Cannabis and Arrowhead Pharmaceuticals
Considering the 90-day investment horizon Aurora Cannabis is expected to generate 3.97 times more return on investment than Arrowhead Pharmaceuticals. However, Aurora Cannabis is 3.97 times more volatile than Arrowhead Pharmaceuticals. It trades about 0.2 of its potential returns per unit of risk. Arrowhead Pharmaceuticals is currently generating about -0.17 per unit of risk. If you would invest 297.00 in Aurora Cannabis on February 12, 2024 and sell it today you would earn a total of 349.00 from holding Aurora Cannabis or generate 117.51% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Aurora Cannabis vs. Arrowhead Pharmaceuticals
Performance |
Timeline |
Aurora Cannabis |
Arrowhead Pharmaceuticals |
Aurora Cannabis and Arrowhead Pharmaceuticals Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Aurora Cannabis and Arrowhead Pharmaceuticals
The main advantage of trading using opposite Aurora Cannabis and Arrowhead Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aurora Cannabis position performs unexpectedly, Arrowhead Pharmaceuticals 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 Arrowhead Pharmaceuticals will offset losses from the drop in Arrowhead Pharmaceuticals' long position.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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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