Correlation Between Postmedia Network and Denison Mines
Can any of the company-specific risk be diversified away by investing in both Postmedia Network and Denison Mines 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 Denison Mines 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 Denison Mines Corp, you can compare the effects of market volatilities on Postmedia Network and Denison Mines 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 Denison Mines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Postmedia Network and Denison Mines.
Diversification Opportunities for Postmedia Network and Denison Mines
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Postmedia and Denison is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Postmedia Network Canada and Denison Mines Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Denison Mines Corp 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 Denison Mines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Denison Mines Corp has no effect on the direction of Postmedia Network i.e., Postmedia Network and Denison Mines go up and down completely randomly.
Pair Corralation between Postmedia Network and Denison Mines
Assuming the 90 days trading horizon Postmedia Network Canada is expected to under-perform the Denison Mines. But the stock apears to be less risky and, when comparing its historical volatility, Postmedia Network Canada is 1.82 times less risky than Denison Mines. The stock trades about -0.15 of its potential returns per unit of risk. The Denison Mines Corp is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 242.00 in Denison Mines Corp on August 25, 2024 and sell it today you would earn a total of 90.00 from holding Denison Mines Corp or generate 37.19% 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. Denison Mines Corp
Performance |
| Timeline |
| Postmedia Network Canada |
| Denison Mines Corp |
Postmedia Network and Denison Mines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Postmedia Network and Denison Mines
The main advantage of trading using opposite Postmedia Network and Denison Mines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Postmedia Network position performs unexpectedly, Denison Mines 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 Denison Mines will offset losses from the drop in Denison Mines' long position.| Postmedia Network vs. Evertz Technologies Limited | Postmedia Network vs. Primaris Retail RE | Postmedia Network vs. Ocumetics Technology Corp | Postmedia Network vs. Dream Office Real |
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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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