Correlation Between Highway 50 and Postmedia Network
Can any of the company-specific risk be diversified away by investing in both Highway 50 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 Highway 50 and Postmedia Network into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Highway 50 Gold and Postmedia Network Canada, you can compare the effects of market volatilities on Highway 50 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 Highway 50 with a short position of Postmedia Network. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highway 50 and Postmedia Network.
Diversification Opportunities for Highway 50 and Postmedia Network
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Highway and Postmedia is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Highway 50 Gold 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 Highway 50 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 Highway 50 Gold 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 Highway 50 i.e., Highway 50 and Postmedia Network go up and down completely randomly.
Pair Corralation between Highway 50 and Postmedia Network
Assuming the 90 days horizon Highway 50 Gold is expected to generate 6.77 times more return on investment than Postmedia Network. However, Highway 50 is 6.77 times more volatile than Postmedia Network Canada. It trades about 0.02 of its potential returns per unit of risk. Postmedia Network Canada is currently generating about -0.02 per unit of risk. If you would invest 15.00 in Highway 50 Gold on October 12, 2024 and sell it today you would lose (1.00) from holding Highway 50 Gold or give up 6.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Highway 50 Gold vs. Postmedia Network Canada
Performance |
| Timeline |
| Highway 50 Gold |
| Postmedia Network Canada |
Highway 50 and Postmedia Network Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highway 50 and Postmedia Network
The main advantage of trading using opposite Highway 50 and Postmedia Network positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highway 50 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.| Highway 50 vs. Postmedia Network Canada | Highway 50 vs. Summa Silver Corp | Highway 50 vs. Aya Gold Silver | Highway 50 vs. Renoworks Software |
| Postmedia Network vs. Hampton Financial Corp | Postmedia Network vs. Canadian Imperial Bank | Postmedia Network vs. Diamond Estates Wines | Postmedia Network vs. Brookfield Office Properties |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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