Correlation Between Madison Pacific and Postmedia Network
Can any of the company-specific risk be diversified away by investing in both Madison Pacific 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 Madison Pacific and Postmedia Network into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Madison Pacific Properties and Postmedia Network Canada, you can compare the effects of market volatilities on Madison Pacific 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 Madison Pacific with a short position of Postmedia Network. Check out your portfolio center. Please also check ongoing floating volatility patterns of Madison Pacific and Postmedia Network.
Diversification Opportunities for Madison Pacific and Postmedia Network
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Madison and Postmedia is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Madison Pacific Properties 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 Madison Pacific 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 Madison Pacific Properties 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 Madison Pacific i.e., Madison Pacific and Postmedia Network go up and down completely randomly.
Pair Corralation between Madison Pacific and Postmedia Network
Assuming the 90 days trading horizon Madison Pacific Properties is expected to under-perform the Postmedia Network. But the stock apears to be less risky and, when comparing its historical volatility, Madison Pacific Properties is 1.1 times less risky than Postmedia Network. The stock trades about -0.42 of its potential returns per unit of risk. The Postmedia Network Canada is currently generating about -0.29 of returns per unit of risk over similar time horizon. If you would invest 132.00 in Postmedia Network Canada on August 29, 2024 and sell it today you would lose (10.00) from holding Postmedia Network Canada or give up 7.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Madison Pacific Properties vs. Postmedia Network Canada
Performance |
| Timeline |
| Madison Pacific Prop |
| Postmedia Network Canada |
Madison Pacific and Postmedia Network Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Madison Pacific and Postmedia Network
The main advantage of trading using opposite Madison Pacific and Postmedia Network positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Madison Pacific 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.| Madison Pacific vs. Melcor Developments | Madison Pacific vs. Wall Financial | Madison Pacific vs. Genesis Land Development | Madison Pacific vs. Mainstreet Equity Corp |
| Postmedia Network vs. Royal Helium | Postmedia Network vs. Excelsior Mining Corp | Postmedia Network vs. Vista Gold | Postmedia Network vs. TeraGo Inc |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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