Correlation Between Postmedia Network and Sparx Technology
Can any of the company-specific risk be diversified away by investing in both Postmedia Network and Sparx Technology 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 Sparx Technology 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 Sparx Technology, you can compare the effects of market volatilities on Postmedia Network and Sparx Technology 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 Sparx Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Postmedia Network and Sparx Technology.
Diversification Opportunities for Postmedia Network and Sparx Technology
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Postmedia and Sparx is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Postmedia Network Canada and Sparx Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparx Technology 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 Sparx Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparx Technology has no effect on the direction of Postmedia Network i.e., Postmedia Network and Sparx Technology go up and down completely randomly.
Pair Corralation between Postmedia Network and Sparx Technology
Assuming the 90 days trading horizon Postmedia Network Canada is expected to generate 1.87 times more return on investment than Sparx Technology. However, Postmedia Network is 1.87 times more volatile than Sparx Technology. It trades about 0.12 of its potential returns per unit of risk. Sparx Technology is currently generating about 0.08 per unit of risk. If you would invest 124.00 in Postmedia Network Canada on October 23, 2024 and sell it today you would earn a total of 12.00 from holding Postmedia Network Canada or generate 9.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Postmedia Network Canada vs. Sparx Technology
Performance |
| Timeline |
| Postmedia Network Canada |
| Sparx Technology |
Postmedia Network and Sparx Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Postmedia Network and Sparx Technology
The main advantage of trading using opposite Postmedia Network and Sparx Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Postmedia Network position performs unexpectedly, Sparx Technology 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 Sparx Technology will offset losses from the drop in Sparx Technology's long position.| Postmedia Network vs. Canadian General Investments | Postmedia Network vs. Verizon Communications CDR | Postmedia Network vs. NeuPath Health | Postmedia Network vs. Economic Investment Trust |
| Sparx Technology vs. Gamehost | Sparx Technology vs. Gatos Silver | Sparx Technology vs. T2 Metals Corp | Sparx Technology vs. Nicola Mining |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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