Correlation Between Cytodyn and Aurora Cannabis

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Can any of the company-specific risk be diversified away by investing in both Cytodyn 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 Cytodyn and Aurora Cannabis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cytodyn and Aurora Cannabis, you can compare the effects of market volatilities on Cytodyn 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 Cytodyn with a short position of Aurora Cannabis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cytodyn and Aurora Cannabis.

Diversification Opportunities for Cytodyn and Aurora Cannabis

0.15
  Correlation Coefficient

Average diversification

The 3 months correlation between Cytodyn and Aurora is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Cytodyn and Aurora Cannabis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora Cannabis and Cytodyn 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 Cytodyn 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 Cytodyn i.e., Cytodyn and Aurora Cannabis go up and down completely randomly.

Pair Corralation between Cytodyn and Aurora Cannabis

Given the investment horizon of 90 days Cytodyn is expected to generate 1.54 times less return on investment than Aurora Cannabis. In addition to that, Cytodyn is 1.88 times more volatile than Aurora Cannabis. It trades about 0.08 of its total potential returns per unit of risk. Aurora Cannabis is currently generating about 0.23 per unit of volatility. If you would invest  331.00  in Aurora Cannabis on December 29, 2023 and sell it today you would earn a total of  144.00  from holding Aurora Cannabis or generate 43.5% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy95.65%
ValuesDaily Returns

Cytodyn  vs.  Aurora Cannabis

 Performance 
       Timeline  
Cytodyn 

Risk-Adjusted Performance

1 of 100

 
Low
 
High
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Cytodyn are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile fundamental indicators, Cytodyn showed solid returns over the last few months and may actually be approaching a breakup point.
Aurora Cannabis 

Risk-Adjusted Performance

2 of 100

 
Low
 
High
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Aurora Cannabis are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Aurora Cannabis may actually be approaching a critical reversion point that can send shares even higher in April 2024.

Cytodyn and Aurora Cannabis Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Cytodyn and Aurora Cannabis

The main advantage of trading using opposite Cytodyn and Aurora Cannabis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cytodyn 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 Cytodyn 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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