Correlation Between Aurora Cannabis and Medicure
Can any of the company-specific risk be diversified away by investing in both Aurora Cannabis and Medicure 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 Medicure into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aurora Cannabis and Medicure, you can compare the effects of market volatilities on Aurora Cannabis and Medicure 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 Medicure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurora Cannabis and Medicure.
Diversification Opportunities for Aurora Cannabis and Medicure
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Aurora and Medicure is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Cannabis and Medicure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medicure 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 Medicure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medicure has no effect on the direction of Aurora Cannabis i.e., Aurora Cannabis and Medicure go up and down completely randomly.
Pair Corralation between Aurora Cannabis and Medicure
Considering the 90-day investment horizon Aurora Cannabis is expected to under-perform the Medicure. In addition to that, Aurora Cannabis is 1.56 times more volatile than Medicure. It trades about 0.0 of its total potential returns per unit of risk. Medicure is currently generating about 0.01 per unit of volatility. If you would invest 81.00 in Medicure on August 29, 2024 and sell it today you would lose (13.00) from holding Medicure or give up 16.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aurora Cannabis vs. Medicure
Performance |
| Timeline |
| Aurora Cannabis |
| Medicure |
Aurora Cannabis and Medicure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aurora Cannabis and Medicure
The main advantage of trading using opposite Aurora Cannabis and Medicure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aurora Cannabis position performs unexpectedly, Medicure 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 Medicure will offset losses from the drop in Medicure's long position.| Aurora Cannabis vs. Canopy Growth Corp | Aurora Cannabis vs. SNDL Inc | Aurora Cannabis vs. Cronos Group | Aurora Cannabis vs. Curaleaf Holdings |
| Medicure vs. PayPal Holdings | Medicure vs. Nasdaq Inc | Medicure vs. Choice Hotels International | Medicure vs. Microsoft |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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