Correlation Between IShares Fundamental and Aurora Cannabis

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

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

Diversification Opportunities for IShares Fundamental and Aurora Cannabis

-0.75

Correlation Coefficient

IShares Fundamental  Aurora Cannabis

Pay attention - limited upside

The 3 months correlation between IShares and Aurora is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding iShares Fundamental Hedged and Aurora Cannabis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora Cannabis and IShares Fundamental 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 iShares Fundamental Hedged 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 IShares Fundamental i.e., IShares Fundamental and Aurora Cannabis go up and down completely randomly.

Pair Corralation between IShares Fundamental and Aurora Cannabis

Assuming the 90 days trading horizon iShares Fundamental Hedged is expected to under-perform the Aurora Cannabis. But the etf apears to be less risky and, when comparing its historical volatility, iShares Fundamental Hedged is 3.77 times less risky than Aurora Cannabis. The etf trades about -0.23 of its potential returns per unit of risk. The Aurora Cannabis is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  583.00  in Aurora Cannabis on September 20, 2024 and sell it today you would earn a total of  28.00  from holding Aurora Cannabis or generate 4.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.65%
Values	Daily Returns

iShares Fundamental Hedged  vs.  Aurora Cannabis

iShares Fundamental

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Fundamental Hedged has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, IShares Fundamental is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

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. In spite of abnormal performance in the last few months, the Stock's fundamental drivers remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with IShares Fundamental and Aurora Cannabis

The main advantage of trading using opposite IShares Fundamental and Aurora Cannabis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Fundamental 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 iShares Fundamental Hedged 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.