Correlation Between Medicure and Aurora Cannabis
Can any of the company-specific risk be diversified away by investing in both Medicure 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 Medicure and Aurora Cannabis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Medicure and Aurora Cannabis, you can compare the effects of market volatilities on Medicure 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 Medicure with a short position of Aurora Cannabis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medicure and Aurora Cannabis.
Diversification Opportunities for Medicure and Aurora Cannabis
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Medicure and Aurora is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Medicure and Aurora Cannabis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora Cannabis and Medicure 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 Medicure 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 Medicure i.e., Medicure and Aurora Cannabis go up and down completely randomly.
Pair Corralation between Medicure and Aurora Cannabis
Assuming the 90 days horizon Medicure is expected to generate 0.97 times more return on investment than Aurora Cannabis. However, Medicure is 1.03 times less risky than Aurora Cannabis. It trades about 0.0 of its potential returns per unit of risk. Aurora Cannabis is currently generating about -0.04 per unit of risk. If you would invest 75.00 in Medicure on August 29, 2024 and sell it today you would lose (7.00) from holding Medicure or give up 9.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Medicure vs. Aurora Cannabis
Performance |
| Timeline |
| Medicure |
| Aurora Cannabis |
Medicure and Aurora Cannabis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Medicure and Aurora Cannabis
The main advantage of trading using opposite Medicure and Aurora Cannabis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medicure 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.| Medicure vs. PayPal Holdings | Medicure vs. Nasdaq Inc | Medicure vs. Choice Hotels International | Medicure vs. Microsoft |
| Aurora Cannabis vs. Canopy Growth Corp | Aurora Cannabis vs. SNDL Inc | Aurora Cannabis vs. Cronos Group | Aurora Cannabis vs. Curaleaf Holdings |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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