Correlation Between Electra Battery and Postmedia Network
Can any of the company-specific risk be diversified away by investing in both Electra Battery 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 Electra Battery and Postmedia Network into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Electra Battery Materials and Postmedia Network Canada, you can compare the effects of market volatilities on Electra Battery 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 Electra Battery with a short position of Postmedia Network. Check out your portfolio center. Please also check ongoing floating volatility patterns of Electra Battery and Postmedia Network.
Diversification Opportunities for Electra Battery and Postmedia Network
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Electra and Postmedia is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Electra Battery Materials 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 Electra Battery 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 Electra Battery Materials 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 Electra Battery i.e., Electra Battery and Postmedia Network go up and down completely randomly.
Pair Corralation between Electra Battery and Postmedia Network
Assuming the 90 days trading horizon Electra Battery Materials is expected to under-perform the Postmedia Network. In addition to that, Electra Battery is 1.26 times more volatile than Postmedia Network Canada. It trades about -0.32 of its total potential returns per unit of risk. Postmedia Network Canada is currently generating about -0.23 per unit of volatility. If you would invest 136.00 in Postmedia Network Canada on September 13, 2024 and sell it today you would lose (17.00) from holding Postmedia Network Canada or give up 12.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Electra Battery Materials vs. Postmedia Network Canada
Performance |
| Timeline |
| Electra Battery Materials |
| Postmedia Network Canada |
Electra Battery and Postmedia Network Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Electra Battery and Postmedia Network
The main advantage of trading using opposite Electra Battery and Postmedia Network positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Electra Battery 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.| Electra Battery vs. Foraco International SA | Electra Battery vs. Geodrill Limited | Electra Battery vs. Major Drilling Group | Electra Battery vs. Bri Chem Corp |
| Postmedia Network vs. TGS Esports | Postmedia Network vs. Osisko Metals | Postmedia Network vs. Lion One Metals | Postmedia Network vs. iSign Media Solutions |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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