Correlation Between Aurora Cannabis and AMN Healthcare

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

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

Diversification Opportunities for Aurora Cannabis and AMN Healthcare

-0.23

Correlation Coefficient

Aurora Cannabis  AMN Healthcare

Very good diversification

The 3 months correlation between Aurora and AMN is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Cannabis and AMN Healthcare Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMN Healthcare Services 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 AMN Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMN Healthcare Services has no effect on the direction of Aurora Cannabis i.e., Aurora Cannabis and AMN Healthcare go up and down completely randomly.

Pair Corralation between Aurora Cannabis and AMN Healthcare

Considering the 90-day investment horizon Aurora Cannabis is expected to generate 2.51 times more return on investment than AMN Healthcare. However, Aurora Cannabis is 2.51 times more volatile than AMN Healthcare Services. It trades about 0.15 of its potential returns per unit of risk. AMN Healthcare Services is currently generating about -0.1 per unit of risk. If you would invest  399.00  in Aurora Cannabis on January 26, 2024 and sell it today you would earn a total of  321.00  from holding Aurora Cannabis or generate 80.45% return on investment over 90 days.

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

Aurora Cannabis  vs.  AMN Healthcare Services

Aurora Cannabis

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aurora Cannabis are ranked lower than 11 (%) 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.

AMN Healthcare Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AMN Healthcare Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in May 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Aurora Cannabis and AMN Healthcare

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

The idea behind Aurora Cannabis and AMN Healthcare Services 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.