Correlation Between SPoT Coffee and Postmedia Network
Can any of the company-specific risk be diversified away by investing in both SPoT Coffee 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 SPoT Coffee and Postmedia Network into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPoT Coffee and Postmedia Network Canada, you can compare the effects of market volatilities on SPoT Coffee 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 SPoT Coffee with a short position of Postmedia Network. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPoT Coffee and Postmedia Network.
Diversification Opportunities for SPoT Coffee and Postmedia Network
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between SPoT and Postmedia is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding SPoT Coffee 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 SPoT Coffee 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 SPoT Coffee 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 SPoT Coffee i.e., SPoT Coffee and Postmedia Network go up and down completely randomly.
Pair Corralation between SPoT Coffee and Postmedia Network
Assuming the 90 days horizon SPoT Coffee is expected to generate 1.0 times less return on investment than Postmedia Network. In addition to that, SPoT Coffee is 1.6 times more volatile than Postmedia Network Canada. It trades about 0.01 of its total potential returns per unit of risk. Postmedia Network Canada is currently generating about 0.02 per unit of volatility. If you would invest 142.00 in Postmedia Network Canada on September 3, 2024 and sell it today you would lose (17.00) from holding Postmedia Network Canada or give up 11.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
SPoT Coffee vs. Postmedia Network Canada
Performance |
| Timeline |
| SPoT Coffee |
| Postmedia Network Canada |
SPoT Coffee and Postmedia Network Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPoT Coffee and Postmedia Network
The main advantage of trading using opposite SPoT Coffee and Postmedia Network positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPoT Coffee 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.| SPoT Coffee vs. High Liner Foods | SPoT Coffee vs. Richelieu Hardware | SPoT Coffee vs. International Zeolite Corp | SPoT Coffee vs. European Residential 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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