Correlation Between Rocky Mountain and Postmedia Network
Can any of the company-specific risk be diversified away by investing in both Rocky Mountain and Postmedia Network 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 Rocky Mountain and Postmedia Network into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rocky Mountain Liquor and Postmedia Network Canada, you can compare the effects of market volatilities on Rocky Mountain and Postmedia Network 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 Rocky Mountain with a short position of Postmedia Network. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rocky Mountain and Postmedia Network.
Diversification Opportunities for Rocky Mountain and Postmedia Network
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Rocky and Postmedia is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Rocky Mountain Liquor and Postmedia Network Canada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Postmedia Network Canada and Rocky Mountain 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 Rocky Mountain Liquor are associated (or correlated) with Postmedia Network. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Postmedia Network Canada has no effect on the direction of Rocky Mountain i.e., Rocky Mountain and Postmedia Network go up and down completely randomly.
Pair Corralation between Rocky Mountain and Postmedia Network
Assuming the 90 days horizon Rocky Mountain Liquor is expected to generate 2.31 times more return on investment than Postmedia Network. However, Rocky Mountain is 2.31 times more volatile than Postmedia Network Canada. It trades about -0.12 of its potential returns per unit of risk. Postmedia Network Canada is currently generating about -0.29 per unit of risk. If you would invest 13.00 in Rocky Mountain Liquor on August 29, 2024 and sell it today you would lose (1.00) from holding Rocky Mountain Liquor or give up 7.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rocky Mountain Liquor vs. Postmedia Network Canada
Performance |
| Timeline |
| Rocky Mountain Liquor |
| Postmedia Network Canada |
Rocky Mountain and Postmedia Network Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rocky Mountain and Postmedia Network
The main advantage of trading using opposite Rocky Mountain and Postmedia Network positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rocky Mountain position performs unexpectedly, Postmedia Network 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 Postmedia Network will offset losses from the drop in Postmedia Network's long position.| Rocky Mountain vs. Nicola Mining | Rocky Mountain vs. Dream Industrial Real | Rocky Mountain vs. Queens Road Capital | Rocky Mountain vs. HPQ Silicon Resources |
| Postmedia Network vs. Royal Helium | Postmedia Network vs. Excelsior Mining Corp | Postmedia Network vs. Vista Gold | Postmedia Network vs. TeraGo Inc |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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