Correlation Between Postmedia Network and Precious Metals
Can any of the company-specific risk be diversified away by investing in both Postmedia Network and Precious Metals 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 Precious Metals 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 Precious Metals And, you can compare the effects of market volatilities on Postmedia Network and Precious Metals 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 Precious Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Postmedia Network and Precious Metals.
Diversification Opportunities for Postmedia Network and Precious Metals
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Postmedia and Precious is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Postmedia Network Canada and Precious Metals And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Precious Metals And 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 Precious Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Precious Metals And has no effect on the direction of Postmedia Network i.e., Postmedia Network and Precious Metals go up and down completely randomly.
Pair Corralation between Postmedia Network and Precious Metals
Assuming the 90 days trading horizon Postmedia Network is expected to generate 2.75 times less return on investment than Precious Metals. In addition to that, Postmedia Network is 4.76 times more volatile than Precious Metals And. It trades about 0.03 of its total potential returns per unit of risk. Precious Metals And is currently generating about 0.33 per unit of volatility. If you would invest 173.00 in Precious Metals And on October 25, 2024 and sell it today you would earn a total of 13.00 from holding Precious Metals And or generate 7.51% 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. Precious Metals And
Performance |
| Timeline |
| Postmedia Network Canada |
| Precious Metals And |
Postmedia Network and Precious Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Postmedia Network and Precious Metals
The main advantage of trading using opposite Postmedia Network and Precious Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Postmedia Network position performs unexpectedly, Precious Metals 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 Precious Metals will offset losses from the drop in Precious Metals' long position.| Postmedia Network vs. Canadian General Investments | Postmedia Network vs. 2028 Investment Grade | Postmedia Network vs. Leading Edge Materials | Postmedia Network vs. Western Investment |
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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