Correlation Between Medicure and Loblaw Companies
Can any of the company-specific risk be diversified away by investing in both Medicure and Loblaw Companies 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 Loblaw Companies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Medicure and Loblaw Companies Limited, you can compare the effects of market volatilities on Medicure and Loblaw Companies 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 Loblaw Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medicure and Loblaw Companies.
Diversification Opportunities for Medicure and Loblaw Companies
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Medicure and Loblaw is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Medicure and Loblaw Companies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loblaw Companies 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 Loblaw Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loblaw Companies has no effect on the direction of Medicure i.e., Medicure and Loblaw Companies go up and down completely randomly.
Pair Corralation between Medicure and Loblaw Companies
Assuming the 90 days horizon Medicure is expected to under-perform the Loblaw Companies. In addition to that, Medicure is 3.17 times more volatile than Loblaw Companies Limited. It trades about 0.0 of its total potential returns per unit of risk. Loblaw Companies Limited is currently generating about 0.37 per unit of volatility. If you would invest 17,815 in Loblaw Companies Limited on September 24, 2024 and sell it today you would earn a total of 1,375 from holding Loblaw Companies Limited or generate 7.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Medicure vs. Loblaw Companies Limited
Performance |
| Timeline |
| Medicure |
| Loblaw Companies |
Medicure and Loblaw Companies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Medicure and Loblaw Companies
The main advantage of trading using opposite Medicure and Loblaw Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medicure position performs unexpectedly, Loblaw Companies 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 Loblaw Companies will offset losses from the drop in Loblaw Companies' long position.| Medicure vs. Decibel Cannabis | Medicure vs. Cannara Biotech | Medicure vs. iShares Canadian HYBrid | Medicure vs. Altagas Cum Red |
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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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