Correlation Between Postmedia Network and Adobe
Can any of the company-specific risk be diversified away by investing in both Postmedia Network and Adobe 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 Postmedia Network and Adobe into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Postmedia Network Canada and Adobe Inc, you can compare the effects of market volatilities on Postmedia Network and Adobe 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 Postmedia Network with a short position of Adobe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Postmedia Network and Adobe.
Diversification Opportunities for Postmedia Network and Adobe
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Postmedia and Adobe is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Postmedia Network Canada and Adobe Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adobe Inc and Postmedia Network 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 Postmedia Network Canada are associated (or correlated) with Adobe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adobe Inc has no effect on the direction of Postmedia Network i.e., Postmedia Network and Adobe go up and down completely randomly.
Pair Corralation between Postmedia Network and Adobe
Assuming the 90 days trading horizon Postmedia Network is expected to generate 1.24 times less return on investment than Adobe. In addition to that, Postmedia Network is 1.8 times more volatile than Adobe Inc. It trades about 0.01 of its total potential returns per unit of risk. Adobe Inc is currently generating about 0.02 per unit of volatility. If you would invest 1,988 in Adobe Inc on September 3, 2024 and sell it today you would earn a total of 77.00 from holding Adobe Inc or generate 3.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Postmedia Network Canada vs. Adobe Inc
Performance |
| Timeline |
| Postmedia Network Canada |
| Adobe Inc |
Postmedia Network and Adobe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Postmedia Network and Adobe
The main advantage of trading using opposite Postmedia Network and Adobe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Postmedia Network position performs unexpectedly, Adobe 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 Adobe will offset losses from the drop in Adobe's long position.| Postmedia Network vs. SalesforceCom CDR | Postmedia Network vs. TGS Esports | Postmedia Network vs. Marimaca Copper Corp | Postmedia Network vs. SPoT Coffee |
| Adobe vs. Guru Organic Energy | Adobe vs. Economic Investment Trust | Adobe vs. Postmedia Network Canada | Adobe vs. Solid Impact Investments |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
Other Complementary Tools
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation |