Correlation Between Dream Office and Postmedia Network
Can any of the company-specific risk be diversified away by investing in both Dream Office and Postmedia Network 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 Dream Office and Postmedia Network into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dream Office Real and Postmedia Network Canada, you can compare the effects of market volatilities on Dream Office and Postmedia Network 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 Dream Office with a short position of Postmedia Network. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dream Office and Postmedia Network.
Diversification Opportunities for Dream Office and Postmedia Network
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dream and Postmedia is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Dream Office Real and Postmedia Network Canada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Postmedia Network Canada and Dream Office 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 Dream Office Real are associated (or correlated) with Postmedia Network. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Postmedia Network Canada has no effect on the direction of Dream Office i.e., Dream Office and Postmedia Network go up and down completely randomly.
Pair Corralation between Dream Office and Postmedia Network
Assuming the 90 days trading horizon Dream Office Real is expected to generate 0.76 times more return on investment than Postmedia Network. However, Dream Office Real is 1.32 times less risky than Postmedia Network. It trades about 0.0 of its potential returns per unit of risk. Postmedia Network Canada is currently generating about -0.01 per unit of risk. If you would invest 2,021 in Dream Office Real on August 25, 2024 and sell it today you would lose (119.00) from holding Dream Office Real or give up 5.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dream Office Real vs. Postmedia Network Canada
Performance |
| Timeline |
| Dream Office Real |
| Postmedia Network Canada |
Dream Office and Postmedia Network Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dream Office and Postmedia Network
The main advantage of trading using opposite Dream Office and Postmedia Network positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dream Office position performs unexpectedly, Postmedia Network 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 Postmedia Network will offset losses from the drop in Postmedia Network's long position.| Dream Office vs. Artis Real Estate | Dream Office vs. Boardwalk Real Estate | Dream Office vs. Allied Properties Real | Dream Office vs. HR Real Estate |
| Postmedia Network vs. Genesis Land Development | Postmedia Network vs. ADF Group | Postmedia Network vs. Madison Pacific Properties | Postmedia Network vs. Goodfellow |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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