Correlation Between AYR Strategies and Aurora Cannabis

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

By analyzing existing cross correlation between AYR Strategies Class and Aurora Cannabis, you can compare the effects of market volatilities on AYR Strategies 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 AYR Strategies with a short position of Aurora Cannabis. Check out your portfolio center. Please also check ongoing floating volatility patterns of AYR Strategies and Aurora Cannabis.

Diversification Opportunities for AYR Strategies and Aurora Cannabis

0.02

Correlation Coefficient

AYR Strategies  Aurora Cannabis

Significant diversification

The 3 months correlation between AYR and Aurora is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding AYR Strategies Class and Aurora Cannabis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora Cannabis and AYR Strategies 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 AYR Strategies Class 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 AYR Strategies i.e., AYR Strategies and Aurora Cannabis go up and down completely randomly.

Pair Corralation between AYR Strategies and Aurora Cannabis

Assuming the 90 days horizon AYR Strategies Class is expected to under-perform the Aurora Cannabis. In addition to that, AYR Strategies is 1.04 times more volatile than Aurora Cannabis. It trades about -0.18 of its total potential returns per unit of risk. Aurora Cannabis is currently generating about 0.04 per unit of volatility. If you would invest  410.00  in Aurora Cannabis on December 19, 2024 and sell it today you would earn a total of  24.00  from holding Aurora Cannabis or generate 5.85% return on investment over 90 days.

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

AYR Strategies Class  vs.  Aurora Cannabis

AYR Strategies Class

Risk-Adjusted Performance

Very Weak

Over the last 90 days AYR Strategies Class has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Aurora Cannabis

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Aurora Cannabis are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady fundamental indicators, Aurora Cannabis sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AYR Strategies and Aurora Cannabis

The main advantage of trading using opposite AYR Strategies and Aurora Cannabis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AYR Strategies 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 AYR Strategies Class 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.

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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.