Correlation Between Postmedia Network and Erdene Resource
Can any of the company-specific risk be diversified away by investing in both Postmedia Network and Erdene Resource 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 Erdene Resource 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 Erdene Resource Development, you can compare the effects of market volatilities on Postmedia Network and Erdene Resource 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 Erdene Resource. Check out your portfolio center. Please also check ongoing floating volatility patterns of Postmedia Network and Erdene Resource.
Diversification Opportunities for Postmedia Network and Erdene Resource
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Postmedia and Erdene is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Postmedia Network Canada and Erdene Resource Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erdene Resource Deve 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 Erdene Resource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Erdene Resource Deve has no effect on the direction of Postmedia Network i.e., Postmedia Network and Erdene Resource go up and down completely randomly.
Pair Corralation between Postmedia Network and Erdene Resource
Assuming the 90 days trading horizon Postmedia Network Canada is expected to under-perform the Erdene Resource. But the stock apears to be less risky and, when comparing its historical volatility, Postmedia Network Canada is 1.16 times less risky than Erdene Resource. The stock trades about -0.23 of its potential returns per unit of risk. The Erdene Resource Development is currently generating about -0.18 of returns per unit of risk over similar time horizon. If you would invest 67.00 in Erdene Resource Development on September 2, 2024 and sell it today you would lose (8.00) from holding Erdene Resource Development or give up 11.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Postmedia Network Canada vs. Erdene Resource Development
Performance |
| Timeline |
| Postmedia Network Canada |
| Erdene Resource Deve |
Postmedia Network and Erdene Resource Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Postmedia Network and Erdene Resource
The main advantage of trading using opposite Postmedia Network and Erdene Resource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Postmedia Network position performs unexpectedly, Erdene Resource 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 Erdene Resource will offset losses from the drop in Erdene Resource's long position.| Postmedia Network vs. Dream Industrial Real | Postmedia Network vs. Canlan Ice Sports | Postmedia Network vs. Computer Modelling Group | Postmedia Network vs. Nicola Mining |
| Erdene Resource vs. Kore Mining | Erdene Resource vs. Canagold Resources | Erdene Resource vs. Grande Portage Resources | Erdene Resource vs. Bluestone Resources |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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