Correlation Between Postmedia Network and VersaBank
Can any of the company-specific risk be diversified away by investing in both Postmedia Network and VersaBank 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 VersaBank 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 VersaBank, you can compare the effects of market volatilities on Postmedia Network and VersaBank 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 VersaBank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Postmedia Network and VersaBank.
Diversification Opportunities for Postmedia Network and VersaBank
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Postmedia and VersaBank is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Postmedia Network Canada and VersaBank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VersaBank 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 VersaBank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VersaBank has no effect on the direction of Postmedia Network i.e., Postmedia Network and VersaBank go up and down completely randomly.
Pair Corralation between Postmedia Network and VersaBank
Assuming the 90 days trading horizon Postmedia Network is expected to generate 1.59 times less return on investment than VersaBank. In addition to that, Postmedia Network is 2.84 times more volatile than VersaBank. It trades about 0.02 of its total potential returns per unit of risk. VersaBank is currently generating about 0.11 per unit of volatility. If you would invest 1,044 in VersaBank on September 12, 2024 and sell it today you would earn a total of 1,154 from holding VersaBank or generate 110.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Postmedia Network Canada vs. VersaBank
Performance |
| Timeline |
| Postmedia Network Canada |
| VersaBank |
Postmedia Network and VersaBank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Postmedia Network and VersaBank
The main advantage of trading using opposite Postmedia Network and VersaBank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Postmedia Network position performs unexpectedly, VersaBank 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 VersaBank will offset losses from the drop in VersaBank'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 |
| VersaBank vs. Brompton Lifeco Split | VersaBank vs. North American Financial | VersaBank vs. Prime Dividend Corp | VersaBank 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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