Correlation Between Medicure and PayPal Holdings
Can any of the company-specific risk be diversified away by investing in both Medicure and PayPal Holdings 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 PayPal Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Medicure and PayPal Holdings, you can compare the effects of market volatilities on Medicure and PayPal Holdings 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 PayPal Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medicure and PayPal Holdings.
Diversification Opportunities for Medicure and PayPal Holdings
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Medicure and PayPal is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Medicure and PayPal Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PayPal Holdings 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 PayPal Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PayPal Holdings has no effect on the direction of Medicure i.e., Medicure and PayPal Holdings go up and down completely randomly.
Pair Corralation between Medicure and PayPal Holdings
Assuming the 90 days horizon Medicure is expected to generate 3.6 times more return on investment than PayPal Holdings. However, Medicure is 3.6 times more volatile than PayPal Holdings. It trades about 0.11 of its potential returns per unit of risk. PayPal Holdings is currently generating about 0.27 per unit of risk. If you would invest 63.00 in Medicure on September 1, 2024 and sell it today you would earn a total of 7.00 from holding Medicure or generate 11.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Medicure vs. PayPal Holdings
Performance |
| Timeline |
| Medicure |
| PayPal Holdings |
Medicure and PayPal Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Medicure and PayPal Holdings
The main advantage of trading using opposite Medicure and PayPal Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medicure position performs unexpectedly, PayPal Holdings 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 PayPal Holdings will offset losses from the drop in PayPal Holdings' long position.| Medicure vs. Brainsway | Medicure vs. Venus Concept | Medicure vs. Tactile Systems Technology | Medicure vs. Icecure Medical |
| PayPal Holdings vs. SoFi Technologies | PayPal Holdings vs. Visa Class A | PayPal Holdings vs. Mastercard | PayPal Holdings vs. Capital One Financial |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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