Correlation Between Postmedia Network and American Hotel
Can any of the company-specific risk be diversified away by investing in both Postmedia Network and American Hotel 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 American Hotel 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 American Hotel Income, you can compare the effects of market volatilities on Postmedia Network and American Hotel 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 American Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Postmedia Network and American Hotel.
Diversification Opportunities for Postmedia Network and American Hotel
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Postmedia and American is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Postmedia Network Canada and American Hotel Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Hotel Income 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 American Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Hotel Income has no effect on the direction of Postmedia Network i.e., Postmedia Network and American Hotel go up and down completely randomly.
Pair Corralation between Postmedia Network and American Hotel
Assuming the 90 days trading horizon Postmedia Network Canada is expected to under-perform the American Hotel. But the stock apears to be less risky and, when comparing its historical volatility, Postmedia Network Canada is 1.42 times less risky than American Hotel. The stock trades about -0.07 of its potential returns per unit of risk. The American Hotel Income is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 36.00 in American Hotel Income on September 6, 2024 and sell it today you would lose (1.00) from holding American Hotel Income or give up 2.78% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 98.44% |
Values | Daily Returns |
Postmedia Network Canada vs. American Hotel Income
Performance |
Timeline |
Postmedia Network Canada |
American Hotel Income |
Postmedia Network and American Hotel Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Postmedia Network and American Hotel
The main advantage of trading using opposite Postmedia Network and American Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Postmedia Network position performs unexpectedly, American Hotel 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 American Hotel will offset losses from the drop in American Hotel's long position.Postmedia Network vs. KDA Group | Postmedia Network vs. Terreno Resources Corp | Postmedia Network vs. iShares Canadian HYBrid | Postmedia Network vs. Solar Alliance Energy |
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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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