Correlation Between Postmedia Network and Capstone Mining
Can any of the company-specific risk be diversified away by investing in both Postmedia Network and Capstone Mining 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 Capstone Mining 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 Capstone Mining Corp, you can compare the effects of market volatilities on Postmedia Network and Capstone Mining 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 Capstone Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Postmedia Network and Capstone Mining.
Diversification Opportunities for Postmedia Network and Capstone Mining
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Postmedia and Capstone is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Postmedia Network Canada and Capstone Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capstone Mining Corp 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 Capstone Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capstone Mining Corp has no effect on the direction of Postmedia Network i.e., Postmedia Network and Capstone Mining go up and down completely randomly.
Pair Corralation between Postmedia Network and Capstone Mining
Assuming the 90 days trading horizon Postmedia Network Canada is expected to under-perform the Capstone Mining. In addition to that, Postmedia Network is 1.06 times more volatile than Capstone Mining Corp. It trades about -0.07 of its total potential returns per unit of risk. Capstone Mining Corp is currently generating about 0.11 per unit of volatility. If you would invest 805.00 in Capstone Mining Corp on September 6, 2024 and sell it today you would earn a total of 136.00 from holding Capstone Mining Corp or generate 16.89% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Postmedia Network Canada vs. Capstone Mining Corp
Performance |
Timeline |
Postmedia Network Canada |
Capstone Mining Corp |
Postmedia Network and Capstone Mining Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Postmedia Network and Capstone Mining
The main advantage of trading using opposite Postmedia Network and Capstone Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Postmedia Network position performs unexpectedly, Capstone Mining 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 Capstone Mining will offset losses from the drop in Capstone Mining's long position.Postmedia Network vs. Perseus Mining | Postmedia Network vs. Canso Credit Trust | Postmedia Network vs. National Bank of | Postmedia Network vs. Royal Bank of |
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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