Correlation Between Cannara Biotech and Medicure
Can any of the company-specific risk be diversified away by investing in both Cannara Biotech 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 Cannara Biotech and Medicure into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cannara Biotech and Medicure, you can compare the effects of market volatilities on Cannara Biotech 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 Cannara Biotech with a short position of Medicure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cannara Biotech and Medicure.
Diversification Opportunities for Cannara Biotech and Medicure
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Cannara and Medicure is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Cannara Biotech and Medicure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medicure and Cannara Biotech 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 Cannara Biotech 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 Cannara Biotech i.e., Cannara Biotech and Medicure go up and down completely randomly.
Pair Corralation between Cannara Biotech and Medicure
Assuming the 90 days trading horizon Cannara Biotech is expected to generate 1.77 times less return on investment than Medicure. But when comparing it to its historical volatility, Cannara Biotech is 1.22 times less risky than Medicure. It trades about 0.01 of its potential returns per unit of risk. Medicure is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 101.00 in Medicure on September 25, 2024 and sell it today you would lose (12.00) from holding Medicure or give up 11.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.76% |
| Values | Daily Returns |
Cannara Biotech vs. Medicure
Performance |
| Timeline |
| Cannara Biotech |
| Medicure |
Cannara Biotech and Medicure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cannara Biotech and Medicure
The main advantage of trading using opposite Cannara Biotech and Medicure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cannara Biotech 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.| Cannara Biotech vs. Decibel Cannabis | Cannara Biotech vs. iShares Canadian HYBrid | Cannara Biotech vs. Altagas Cum Red | Cannara Biotech vs. European Residential Real |
| Medicure vs. Decibel Cannabis | Medicure vs. Cannara Biotech | Medicure vs. iShares Canadian HYBrid | Medicure vs. Altagas Cum Red |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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