Correlation Between Nasdaq and Medicure
Can any of the company-specific risk be diversified away by investing in both Nasdaq 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 Nasdaq and Medicure into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq Inc and Medicure, you can compare the effects of market volatilities on Nasdaq 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 Nasdaq with a short position of Medicure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and Medicure.
Diversification Opportunities for Nasdaq and Medicure
Excellent diversification
The 3 months correlation between Nasdaq and Medicure is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Medicure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medicure and Nasdaq 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 Nasdaq Inc 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 Nasdaq i.e., Nasdaq and Medicure go up and down completely randomly.
Pair Corralation between Nasdaq and Medicure
Given the investment horizon of 90 days Nasdaq Inc is expected to generate 0.3 times more return on investment than Medicure. However, Nasdaq Inc is 3.38 times less risky than Medicure. It trades about 0.24 of its potential returns per unit of risk. Medicure is currently generating about 0.01 per unit of risk. If you would invest 5,831 in Nasdaq Inc on September 1, 2024 and sell it today you would earn a total of 2,468 from holding Nasdaq Inc or generate 42.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nasdaq Inc vs. Medicure
Performance |
| Timeline |
| Nasdaq Inc |
| Medicure |
Nasdaq and Medicure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq and Medicure
The main advantage of trading using opposite Nasdaq and Medicure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq 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.The idea behind Nasdaq Inc and Medicure pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Medicure vs. Brainsway | Medicure vs. Venus Concept | Medicure vs. Tactile Systems Technology | Medicure vs. Icecure Medical |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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