Correlation Between Postmedia Network and Royal Bank
Can any of the company-specific risk be diversified away by investing in both Postmedia Network and Royal Bank 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 Royal Bank 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 Royal Bank of, you can compare the effects of market volatilities on Postmedia Network and Royal Bank 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 Royal Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Postmedia Network and Royal Bank.
Diversification Opportunities for Postmedia Network and Royal Bank
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Postmedia and Royal is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Postmedia Network Canada and Royal Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royal Bank 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 Royal Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royal Bank has no effect on the direction of Postmedia Network i.e., Postmedia Network and Royal Bank go up and down completely randomly.
Pair Corralation between Postmedia Network and Royal Bank
Assuming the 90 days trading horizon Postmedia Network Canada is expected to generate 5.56 times more return on investment than Royal Bank. However, Postmedia Network is 5.56 times more volatile than Royal Bank of. It trades about 0.09 of its potential returns per unit of risk. Royal Bank of is currently generating about 0.0 per unit of risk. If you would invest 125.00 in Postmedia Network Canada on September 14, 2024 and sell it today you would earn a total of 5.00 from holding Postmedia Network Canada or generate 4.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Postmedia Network Canada vs. Royal Bank of
Performance |
| Timeline |
| Postmedia Network Canada |
| Royal Bank |
Postmedia Network and Royal Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Postmedia Network and Royal Bank
The main advantage of trading using opposite Postmedia Network and Royal Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Postmedia Network position performs unexpectedly, Royal Bank 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 Royal Bank will offset losses from the drop in Royal Bank'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 |
| Royal Bank vs. Brookfield Infrastructure Partners | Royal Bank vs. Brookfield Infrastructure Partners | Royal Bank vs. iShares Canadian HYBrid | Royal Bank vs. Solar Alliance Energy |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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