Correlation Between Aurora Cannabis and CVS Health
Can any of the company-specific risk be diversified away by investing in both Aurora Cannabis and CVS Health 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 CVS Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aurora Cannabis and CVS Health Corp, you can compare the effects of market volatilities on Aurora Cannabis and CVS Health 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 CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurora Cannabis and CVS Health.
Diversification Opportunities for Aurora Cannabis and CVS Health
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Aurora and CVS is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Cannabis and CVS Health Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS Health Corp 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 CVS Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVS Health Corp has no effect on the direction of Aurora Cannabis i.e., Aurora Cannabis and CVS Health go up and down completely randomly.
Pair Corralation between Aurora Cannabis and CVS Health
Considering the 90-day investment horizon Aurora Cannabis is expected to generate 3.43 times more return on investment than CVS Health. However, Aurora Cannabis is 3.43 times more volatile than CVS Health Corp. It trades about 0.03 of its potential returns per unit of risk. CVS Health Corp is currently generating about -0.32 per unit of risk. If you would invest 701.00 in Aurora Cannabis on February 8, 2024 and sell it today you would lose (35.00) from holding Aurora Cannabis or give up 4.99% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Aurora Cannabis vs. CVS Health Corp
Performance |
Timeline |
Aurora Cannabis |
CVS Health Corp |
Aurora Cannabis and CVS Health Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Aurora Cannabis and CVS Health
The main advantage of trading using opposite Aurora Cannabis and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aurora Cannabis position performs unexpectedly, CVS Health 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 CVS Health will offset losses from the drop in CVS Health's long position.Aurora Cannabis vs. Canopy Growth Corp | Aurora Cannabis vs. SNDL Inc | Aurora Cannabis vs. Cronos Group | Aurora Cannabis vs. Curaleaf Holdings |
CVS Health vs. Humana Inc | CVS Health vs. Cigna Corp | CVS Health vs. Elevance Health | CVS Health vs. Centene Corp |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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