Correlation Between Medicure and Decibel Cannabis
Can any of the company-specific risk be diversified away by investing in both Medicure and Decibel 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 Decibel Cannabis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Medicure and Decibel Cannabis, you can compare the effects of market volatilities on Medicure and Decibel 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 Decibel Cannabis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medicure and Decibel Cannabis.
Diversification Opportunities for Medicure and Decibel Cannabis
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Medicure and Decibel is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Medicure and Decibel Cannabis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Decibel 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 Decibel Cannabis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Decibel Cannabis has no effect on the direction of Medicure i.e., Medicure and Decibel Cannabis go up and down completely randomly.
Pair Corralation between Medicure and Decibel Cannabis
Assuming the 90 days horizon Medicure is expected to under-perform the Decibel Cannabis. But the pink sheet apears to be less risky and, when comparing its historical volatility, Medicure is 1.83 times less risky than Decibel Cannabis. The pink sheet trades about -0.04 of its potential returns per unit of risk. The Decibel Cannabis is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 4.10 in Decibel Cannabis on August 30, 2024 and sell it today you would earn a total of 0.40 from holding Decibel Cannabis or generate 9.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Medicure vs. Decibel Cannabis
Performance |
| Timeline |
| Medicure |
| Decibel Cannabis |
Medicure and Decibel Cannabis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Medicure and Decibel Cannabis
The main advantage of trading using opposite Medicure and Decibel Cannabis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medicure position performs unexpectedly, Decibel 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 Decibel Cannabis will offset losses from the drop in Decibel Cannabis' long position.| Medicure vs. PayPal Holdings | Medicure vs. Nasdaq Inc | Medicure vs. Choice Hotels International | Medicure vs. Microsoft |
| Decibel Cannabis vs. Delta 9 Cannabis | Decibel Cannabis vs. Body and Mind | Decibel Cannabis vs. CLS Holdings USA | Decibel Cannabis vs. Halo Collective |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |