Correlation Between Aurora Cannabis and Goodness Growth

Can any of the company-specific risk be diversified away by investing in both Aurora Cannabis and Goodness Growth 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 Goodness Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aurora Cannabis and Goodness Growth Holdings, you can compare the effects of market volatilities on Aurora Cannabis and Goodness Growth 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 Goodness Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurora Cannabis and Goodness Growth.

Diversification Opportunities for Aurora Cannabis and Goodness Growth

0.18

Correlation Coefficient

Aurora Cannabis  Goodness Growth

Average diversification

The 3 months correlation between Aurora and Goodness is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Cannabis and Goodness Growth Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goodness Growth Holdings 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 Goodness Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goodness Growth Holdings has no effect on the direction of Aurora Cannabis i.e., Aurora Cannabis and Goodness Growth go up and down completely randomly.

Pair Corralation between Aurora Cannabis and Goodness Growth

Considering the 90-day investment horizon Aurora Cannabis is expected to generate 17.16 times less return on investment than Goodness Growth. But when comparing it to its historical volatility, Aurora Cannabis is 8.2 times less risky than Goodness Growth. It trades about 0.09 of its potential returns per unit of risk. Goodness Growth Holdings is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  33.00  in Goodness Growth Holdings on October 8, 2024 and sell it today you would earn a total of  24.00  from holding Goodness Growth Holdings or generate 72.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Aurora Cannabis  vs.  Goodness Growth Holdings

Aurora Cannabis

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aurora Cannabis has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Goodness Growth Holdings

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Goodness Growth Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Goodness Growth reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aurora Cannabis and Goodness Growth

The main advantage of trading using opposite Aurora Cannabis and Goodness Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aurora Cannabis position performs unexpectedly, Goodness Growth 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 Goodness Growth will offset losses from the drop in Goodness Growth's long position.

The idea behind Aurora Cannabis and Goodness Growth Holdings 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.

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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.