Correlation Between Postmedia Network and Homerun Resources
Can any of the company-specific risk be diversified away by investing in both Postmedia Network and Homerun Resources 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 Homerun Resources 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 Homerun Resources, you can compare the effects of market volatilities on Postmedia Network and Homerun Resources 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 Homerun Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Postmedia Network and Homerun Resources.
Diversification Opportunities for Postmedia Network and Homerun Resources
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Postmedia and Homerun is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Postmedia Network Canada and Homerun Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Homerun Resources 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 Homerun Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Homerun Resources has no effect on the direction of Postmedia Network i.e., Postmedia Network and Homerun Resources go up and down completely randomly.
Pair Corralation between Postmedia Network and Homerun Resources
Assuming the 90 days trading horizon Postmedia Network Canada is expected to generate 1.58 times more return on investment than Homerun Resources. However, Postmedia Network is 1.58 times more volatile than Homerun Resources. It trades about 0.01 of its potential returns per unit of risk. Homerun Resources is currently generating about -0.11 per unit of risk. If you would invest 124.00 in Postmedia Network Canada on October 29, 2024 and sell it today you would lose (2.00) from holding Postmedia Network Canada or give up 1.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Postmedia Network Canada vs. Homerun Resources
Performance |
| Timeline |
| Postmedia Network Canada |
| Homerun Resources |
Postmedia Network and Homerun Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Postmedia Network and Homerun Resources
The main advantage of trading using opposite Postmedia Network and Homerun Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Postmedia Network position performs unexpectedly, Homerun Resources 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 Homerun Resources will offset losses from the drop in Homerun Resources' long position.| Postmedia Network vs. Homerun Resources | Postmedia Network vs. Sun Peak Metals | Postmedia Network vs. Precious Metals And | Postmedia Network vs. Dream Office Real |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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