Correlation Between Postmedia Network and IA Financial
Can any of the company-specific risk be diversified away by investing in both Postmedia Network and IA Financial 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 IA Financial 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 iA Financial, you can compare the effects of market volatilities on Postmedia Network and IA Financial 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 IA Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Postmedia Network and IA Financial.
Diversification Opportunities for Postmedia Network and IA Financial
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Postmedia and IAG is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Postmedia Network Canada and iA Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iA Financial 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 IA Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iA Financial has no effect on the direction of Postmedia Network i.e., Postmedia Network and IA Financial go up and down completely randomly.
Pair Corralation between Postmedia Network and IA Financial
Assuming the 90 days trading horizon Postmedia Network Canada is expected to generate 4.12 times more return on investment than IA Financial. However, Postmedia Network is 4.12 times more volatile than iA Financial. It trades about 0.02 of its potential returns per unit of risk. iA Financial is currently generating about 0.09 per unit of risk. If you would invest 137.00 in Postmedia Network Canada on September 12, 2024 and sell it today you would lose (12.00) from holding Postmedia Network Canada or give up 8.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Postmedia Network Canada vs. iA Financial
Performance |
| Timeline |
| Postmedia Network Canada |
| iA Financial |
Postmedia Network and IA Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Postmedia Network and IA Financial
The main advantage of trading using opposite Postmedia Network and IA Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Postmedia Network position performs unexpectedly, IA Financial 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 IA Financial will offset losses from the drop in IA Financial's long position.| Postmedia Network vs. Boat Rocker Media | Postmedia Network vs. AKITA Drilling | Postmedia Network vs. Royal Bank of | Postmedia Network vs. Olympia Financial Group |
| IA Financial vs. Brompton Lifeco Split | IA Financial vs. North American Financial | IA Financial vs. Prime Dividend Corp | IA Financial vs. Financial 15 Split |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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