Correlation Between Medicure and Empire Company

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

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

Diversification Opportunities for Medicure and Empire Company

0.11

Correlation Coefficient

Medicure  Empire Company

Average diversification

The 3 months correlation between Medicure and Empire is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Medicure and Empire Company Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Empire Limited 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 Empire Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Empire Limited has no effect on the direction of Medicure i.e., Medicure and Empire Company go up and down completely randomly.

Pair Corralation between Medicure and Empire Company

Assuming the 90 days horizon Medicure is expected to generate 1.26 times less return on investment than Empire Company. In addition to that, Medicure is 3.59 times more volatile than Empire Company Limited. It trades about 0.04 of its total potential returns per unit of risk. Empire Company Limited is currently generating about 0.2 per unit of volatility. If you would invest  3,957  in Empire Company Limited on September 14, 2024 and sell it today you would earn a total of  571.00  from holding Empire Company Limited or generate 14.43% return on investment over 90 days.

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

Medicure  vs.  Empire Company Limited

Medicure

Risk-Adjusted Performance

3 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Medicure are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Medicure may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Empire Limited

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Empire Company Limited are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Empire Company unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Medicure and Empire Company

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

The idea behind Medicure and Empire Company Limited 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.