Correlation Between Forstrong Global and Postmedia Network
Can any of the company-specific risk be diversified away by investing in both Forstrong Global 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 Forstrong Global and Postmedia Network into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Forstrong Global Income and Postmedia Network Canada, you can compare the effects of market volatilities on Forstrong Global 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 Forstrong Global with a short position of Postmedia Network. Check out your portfolio center. Please also check ongoing floating volatility patterns of Forstrong Global and Postmedia Network.
Diversification Opportunities for Forstrong Global and Postmedia Network
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Forstrong and Postmedia is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Forstrong Global Income 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 Forstrong Global 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 Forstrong Global Income 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 Forstrong Global i.e., Forstrong Global and Postmedia Network go up and down completely randomly.
Pair Corralation between Forstrong Global and Postmedia Network
Assuming the 90 days trading horizon Forstrong Global is expected to generate 4.43 times less return on investment than Postmedia Network. But when comparing it to its historical volatility, Forstrong Global Income is 21.75 times less risky than Postmedia Network. It trades about 0.11 of its potential returns per unit of risk. Postmedia Network Canada is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 142.00 in Postmedia Network Canada on September 2, 2024 and sell it today you would lose (17.00) from holding Postmedia Network Canada or give up 11.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 66.53% |
| Values | Daily Returns |
Forstrong Global Income vs. Postmedia Network Canada
Performance |
| Timeline |
| Forstrong Global Income |
| Postmedia Network Canada |
Forstrong Global and Postmedia Network Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Forstrong Global and Postmedia Network
The main advantage of trading using opposite Forstrong Global and Postmedia Network positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Forstrong Global 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.| Forstrong Global vs. Forstrong Global Ex North | Forstrong Global vs. Forstrong Global Growth | Forstrong Global vs. Forstrong Emerging Markets | Forstrong Global vs. NBI High Yield |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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