Correlation Between Better Plant and Aurora Cannabis

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

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

Diversification Opportunities for Better Plant and Aurora Cannabis

0.0

Correlation Coefficient

Better Plant  Aurora Cannabis

Pay attention - limited upside

The 3 months correlation between Better and Aurora is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Better Plant Sciences and Aurora Cannabis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora Cannabis and Better Plant 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 Better Plant Sciences 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 Better Plant i.e., Better Plant and Aurora Cannabis go up and down completely randomly.

Pair Corralation between Better Plant and Aurora Cannabis

If you would invest  1.00  in Better Plant Sciences on October 8, 2024 and sell it today you would earn a total of  0.00  from holding Better Plant Sciences or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	50.0%
Values	Daily Returns

Better Plant Sciences  vs.  Aurora Cannabis

Better Plant Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Better Plant Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Better Plant is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

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.

Pair Trading with Better Plant and Aurora Cannabis

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

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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.