Correlation Between Leading Edge and Postmedia Network
Can any of the company-specific risk be diversified away by investing in both Leading Edge 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 Leading Edge and Postmedia Network into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leading Edge Materials and Postmedia Network Canada, you can compare the effects of market volatilities on Leading Edge 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 Leading Edge with a short position of Postmedia Network. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leading Edge and Postmedia Network.
Diversification Opportunities for Leading Edge and Postmedia Network
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Leading and Postmedia is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Leading Edge 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 Leading Edge 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 Leading Edge 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 Leading Edge i.e., Leading Edge and Postmedia Network go up and down completely randomly.
Pair Corralation between Leading Edge and Postmedia Network
Assuming the 90 days horizon Leading Edge is expected to generate 2.84 times less return on investment than Postmedia Network. But when comparing it to its historical volatility, Leading Edge Materials is 1.71 times less risky than Postmedia Network. It trades about 0.02 of its potential returns per unit of risk. Postmedia Network Canada is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 124.00 in Postmedia Network Canada on October 25, 2024 and sell it today you would earn a total of 0.00 from holding Postmedia Network Canada or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leading Edge Materials vs. Postmedia Network Canada
Performance |
| Timeline |
| Leading Edge Materials |
| Postmedia Network Canada |
Leading Edge and Postmedia Network Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leading Edge and Postmedia Network
The main advantage of trading using opposite Leading Edge and Postmedia Network positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leading Edge 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.| Leading Edge vs. Hannan Metals | Leading Edge vs. Mkango Resources | Leading Edge vs. Elcora Advanced Materials | Leading Edge vs. Midnight Sun Mining |
| Postmedia Network vs. Canadian General Investments | Postmedia Network vs. 2028 Investment Grade | Postmedia Network vs. Leading Edge Materials | Postmedia Network vs. Western 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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