Correlation Between Postmedia Network and Teck Resources
Can any of the company-specific risk be diversified away by investing in both Postmedia Network and Teck Resources 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 Teck Resources 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 Teck Resources Limited, you can compare the effects of market volatilities on Postmedia Network and Teck Resources 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 Teck Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Postmedia Network and Teck Resources.
Diversification Opportunities for Postmedia Network and Teck Resources
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Postmedia and Teck is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Postmedia Network Canada and Teck Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teck Resources 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 Teck Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teck Resources has no effect on the direction of Postmedia Network i.e., Postmedia Network and Teck Resources go up and down completely randomly.
Pair Corralation between Postmedia Network and Teck Resources
Assuming the 90 days trading horizon Postmedia Network Canada is expected to under-perform the Teck Resources. But the stock apears to be less risky and, when comparing its historical volatility, Postmedia Network Canada is 1.39 times less risky than Teck Resources. The stock trades about -0.37 of its potential returns per unit of risk. The Teck Resources Limited is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 6,098 in Teck Resources Limited on November 27, 2024 and sell it today you would lose (269.00) from holding Teck Resources Limited or give up 4.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Postmedia Network Canada vs. Teck Resources Limited
Performance |
| Timeline |
| Postmedia Network Canada |
| Teck Resources |
Postmedia Network and Teck Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Postmedia Network and Teck Resources
The main advantage of trading using opposite Postmedia Network and Teck Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Postmedia Network position performs unexpectedly, Teck Resources 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 Teck Resources will offset losses from the drop in Teck Resources' long position.| Postmedia Network vs. XXIX Metal Corp | Postmedia Network vs. Adex Mining | Postmedia Network vs. Cogeco Communications | Postmedia Network vs. South Pacific Metals |
| Teck Resources vs. First Quantum Minerals | Teck Resources vs. Nutrien | Teck Resources vs. Lundin Mining | Teck Resources vs. Wheaton Precious Metals |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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