Correlation Between Medicure and Supernus Pharmaceuticals

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

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

Diversification Opportunities for Medicure and Supernus Pharmaceuticals

-0.5

Correlation Coefficient

Medicure  Supernus Pharmaceuticals

Very good diversification

The 3 months correlation between Medicure and Supernus is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Medicure and Supernus Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Supernus Pharmaceuticals 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 Supernus Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Supernus Pharmaceuticals has no effect on the direction of Medicure i.e., Medicure and Supernus Pharmaceuticals go up and down completely randomly.

Pair Corralation between Medicure and Supernus Pharmaceuticals

Assuming the 90 days horizon Medicure is expected to under-perform the Supernus Pharmaceuticals. In addition to that, Medicure is 2.36 times more volatile than Supernus Pharmaceuticals. It trades about -0.03 of its total potential returns per unit of risk. Supernus Pharmaceuticals is currently generating about 0.13 per unit of volatility. If you would invest  3,148  in Supernus Pharmaceuticals on September 15, 2024 and sell it today you would earn a total of  469.00  from holding Supernus Pharmaceuticals or generate 14.9% return on investment over 90 days.

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

Medicure  vs.  Supernus Pharmaceuticals

Medicure

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Medicure has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's forward-looking indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Supernus Pharmaceuticals

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Supernus Pharmaceuticals are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Supernus Pharmaceuticals displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Medicure and Supernus Pharmaceuticals

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

The idea behind Medicure and Supernus Pharmaceuticals 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.