Correlation Between Medicure and Rimrock Gold

Can any of the company-specific risk be diversified away by investing in both Medicure and Rimrock Gold 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 Rimrock Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Medicure and Rimrock Gold Corp, you can compare the effects of market volatilities on Medicure and Rimrock Gold 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 Rimrock Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medicure and Rimrock Gold.

Diversification Opportunities for Medicure and Rimrock Gold

-0.17

Correlation Coefficient

Medicure  Rimrock Gold

Good diversification

The 3 months correlation between Medicure and Rimrock is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Medicure and Rimrock Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rimrock Gold Corp 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 Rimrock Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rimrock Gold Corp has no effect on the direction of Medicure i.e., Medicure and Rimrock Gold go up and down completely randomly.

Pair Corralation between Medicure and Rimrock Gold

Assuming the 90 days horizon Medicure is expected to under-perform the Rimrock Gold. But the pink sheet apears to be less risky and, when comparing its historical volatility, Medicure is 6.09 times less risky than Rimrock Gold. The pink sheet trades about -0.17 of its potential returns per unit of risk. The Rimrock Gold Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  0.03  in Rimrock Gold Corp on December 22, 2024 and sell it today you would earn a total of  0.00  from holding Rimrock Gold Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Medicure  vs.  Rimrock Gold Corp

Medicure

Risk-Adjusted Performance

Very Weak

Over the last 90 days Medicure has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's forward-looking indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Rimrock Gold Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Rimrock Gold Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Rimrock Gold disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Medicure and Rimrock Gold

The main advantage of trading using opposite Medicure and Rimrock Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medicure position performs unexpectedly, Rimrock Gold 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 Rimrock Gold will offset losses from the drop in Rimrock Gold's long position.

The idea behind Medicure and Rimrock Gold Corp 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.