Correlation Between Postmedia Network and Economic Investment
Can any of the company-specific risk be diversified away by investing in both Postmedia Network and Economic Investment 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 Economic Investment 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 Economic Investment Trust, you can compare the effects of market volatilities on Postmedia Network and Economic Investment 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 Economic Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Postmedia Network and Economic Investment.
Diversification Opportunities for Postmedia Network and Economic Investment
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Postmedia and Economic is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Postmedia Network Canada and Economic Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Economic Investment Trust 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 Economic Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Economic Investment Trust has no effect on the direction of Postmedia Network i.e., Postmedia Network and Economic Investment go up and down completely randomly.
Pair Corralation between Postmedia Network and Economic Investment
Assuming the 90 days trading horizon Postmedia Network Canada is expected to generate 6.34 times more return on investment than Economic Investment. However, Postmedia Network is 6.34 times more volatile than Economic Investment Trust. It trades about 0.02 of its potential returns per unit of risk. Economic Investment Trust is currently generating about 0.09 per unit of risk. If you would invest 136.00 in Postmedia Network Canada on September 20, 2024 and sell it today you would lose (12.00) from holding Postmedia Network Canada or give up 8.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Postmedia Network Canada vs. Economic Investment Trust
Performance |
| Timeline |
| Postmedia Network Canada |
| Economic Investment Trust |
Postmedia Network and Economic Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Postmedia Network and Economic Investment
The main advantage of trading using opposite Postmedia Network and Economic Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Postmedia Network position performs unexpectedly, Economic Investment 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 Economic Investment will offset losses from the drop in Economic Investment's long position.| Postmedia Network vs. Genesis Land Development | Postmedia Network vs. Madison Pacific Properties | Postmedia Network vs. Goodfellow | Postmedia Network vs. Helix BioPharma Corp |
| Economic Investment vs. Uniteds Limited | Economic Investment vs. E L Financial Corp | Economic Investment vs. Canadian General Investments | Economic Investment vs. Clairvest Group |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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