Correlation Between WSP Global and Postmedia Network
Can any of the company-specific risk be diversified away by investing in both WSP Global 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 WSP Global and Postmedia Network into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WSP Global and Postmedia Network Canada, you can compare the effects of market volatilities on WSP Global 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 WSP Global with a short position of Postmedia Network. Check out your portfolio center. Please also check ongoing floating volatility patterns of WSP Global and Postmedia Network.
Diversification Opportunities for WSP Global and Postmedia Network
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between WSP and Postmedia is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding WSP Global 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 WSP Global 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 WSP Global 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 WSP Global i.e., WSP Global and Postmedia Network go up and down completely randomly.
Pair Corralation between WSP Global and Postmedia Network
Assuming the 90 days trading horizon WSP Global is expected to generate 0.48 times more return on investment than Postmedia Network. However, WSP Global is 2.06 times less risky than Postmedia Network. It trades about -0.07 of its potential returns per unit of risk. Postmedia Network Canada is currently generating about -0.22 per unit of risk. If you would invest 25,011 in WSP Global on August 29, 2024 and sell it today you would lose (490.00) from holding WSP Global or give up 1.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
WSP Global vs. Postmedia Network Canada
Performance |
| Timeline |
| WSP Global |
| Postmedia Network Canada |
WSP Global and Postmedia Network Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WSP Global and Postmedia Network
The main advantage of trading using opposite WSP Global and Postmedia Network positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WSP Global 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.| WSP Global vs. TFI International | WSP Global vs. Stantec | WSP Global vs. Waste Connections | WSP Global vs. CGI Inc |
| Postmedia Network vs. NeXGold Mining Corp | Postmedia Network vs. Renoworks Software | Postmedia Network vs. Millennium Silver Corp | Postmedia Network vs. Richelieu Hardware |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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