Correlation Between Postmedia Network and Salesforce
Can any of the company-specific risk be diversified away by investing in both Postmedia Network and Salesforce 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 Salesforce 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 SalesforceCom CDR, you can compare the effects of market volatilities on Postmedia Network and Salesforce 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 Salesforce. Check out your portfolio center. Please also check ongoing floating volatility patterns of Postmedia Network and Salesforce.
Diversification Opportunities for Postmedia Network and Salesforce
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Postmedia and Salesforce is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Postmedia Network Canada and SalesforceCom CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SalesforceCom CDR 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 Salesforce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SalesforceCom CDR has no effect on the direction of Postmedia Network i.e., Postmedia Network and Salesforce go up and down completely randomly.
Pair Corralation between Postmedia Network and Salesforce
Assuming the 90 days trading horizon Postmedia Network is expected to generate 1.62 times less return on investment than Salesforce. In addition to that, Postmedia Network is 2.74 times more volatile than SalesforceCom CDR. It trades about 0.02 of its total potential returns per unit of risk. SalesforceCom CDR is currently generating about 0.09 per unit of volatility. If you would invest 1,109 in SalesforceCom CDR on September 3, 2024 and sell it today you would earn a total of 1,522 from holding SalesforceCom CDR or generate 137.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Postmedia Network Canada vs. SalesforceCom CDR
Performance |
| Timeline |
| Postmedia Network Canada |
| SalesforceCom CDR |
Postmedia Network and Salesforce Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Postmedia Network and Salesforce
The main advantage of trading using opposite Postmedia Network and Salesforce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Postmedia Network position performs unexpectedly, Salesforce 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 Salesforce will offset losses from the drop in Salesforce's long position.| Postmedia Network vs. SalesforceCom CDR | Postmedia Network vs. TGS Esports | Postmedia Network vs. Marimaca Copper Corp | Postmedia Network vs. SPoT Coffee |
| Salesforce vs. Financial 15 Split | Salesforce vs. CI Financial Corp | Salesforce vs. Brookfield Office Properties | Salesforce vs. Income Financial Trust |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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